CCI-T Condovoice Fall 2022

Canadian Condominium Institute/ Institut canadien des condominiums Toronto & Area Chapter

1 Eglinton Ave. Toronto, ON M4P 3A1

Tel: (416) 840-5346 E-mail: info@ccitoronto.org Website: www.ccitoronto.org

2021-2022 Board of Directors

PRESIDENT: Murray Johnson, OLCM, CCI (Hon’s), LCCI Co-Chair, Conference Committee Member, Tarion Sub-Committee Crossbridge Condominium Services Ltd.

VICE-PRESIDENT:

Lyndsey McNally, OLCM, LCCI Member, Legislative, Communications Committees Member, Social Media Sub-Committee Co-Chair, Education Committee CCI-N Liaison CWB Maxium Financial

SECRETARY/TREASURER:

Brian Antman, CPA, CA Chair, Finance Committee, Member, Conference Committee, Member, Communications Committee Adams & Miles LLP Chartered Professional Accountants

Board Members

Francesco Deo, BA (Hons), JD Member, Legislative Committee Chair, Volunteer Resource Committee Deo Condominium Lawyers

Bob Girard, B.Comm, ACCI Member, CondoSTRENGTH Committee Member, Education Committee Member, Finance Committee Member, Membership Retention Sub-Committee YCC # 50

Brian Horlick, B.Comm., B.C.L., LL.B., ACCI, FCCI

Chair, Communications Committee, Member, Conference Committee Horlick Levitt Di Lella LLP

Warren Kleiner, BA., LL.B.

Chair, Legislative Committee Co-Chair, Ontario Caucus Member, Marketing Committee Member, Awards Sub-Committee Shibley Righton LLP

Farzad Lahouti, MBA Member, Marketing Committee Member, CondoSTRENGTH Committee Chair, Awards Sub-Committee YRCC 798

Eric Lakien, MBA, PhD.

Member, CondoSTRENGTH Committee Member, Marketing Committee Co-Chair, Education Committee YRCC # 798

Connie Pappas-Boccitto SRS, ABR, SRES, CCSP

Chair, CondoSTRENGTH Committee Member, Social Media Sub-Committee Royal LePage Terrequity Realty, Brokerage

Sophia Rojenko, B.Eng, EIT

Member, Education Committee Chair, Social Media Sub-Committee Synergy Partners

Lisa Kay, BA Econ

Member, Communications Committee KayCondoGC Inc.

Stephen Ilkiw

Chair, Marketing Committee CondoHive / Bedford Hill Consulting

OPERATIONS MANAGER - Meredith Lowry

President’s Message

So Long, But Not Farewell

Time passes so quickly. I find it hard to believe that this will be my last President’s Message to you before we have our Annual Members Meeting in October. It seems like just yesterday that Tania Haluk passed the tiara to me and in the middle of a pandemic, I often wondered what I could contribute to our wonderful organization. It will be Lyndsey McNally’s turn to take the reins for her two years as President and leader of the fantastically hard working and extremely talented volunteers that form your Board of Directors.

I think we did some really good things during my tenure, but that is a testament to the Board of Directors and the nearly sixty additional volunteers that tirelessly give their time to make condo living a better experience for all. At the time of writing we began planning our first return to in-person events for August and we all survived. I guess there is hope for us all yet.

Our new association management company, Redstone Agency, is now taking the sole lead on the organization of the ACMO-CCI-T Condo Conference and I couldn’t be more excited about the conference and hope that you will all make an effort to attend. If you attend the conference, please search for me and come and say hello.

I look to the transfer of leadership to Lyndsey as a bittersweet end to my presidency. Being the President has continuously taught me a lot about leadership and volunteering, I will miss that every day. Having said that, I am excited about the future of CCI-T under the leadership of Lyndsey and we have been

working over the past year to prepare her to take on the role.

The longest sitting director on the CCI-T board is Bob Girard who over the years has provided considerable contributions to the Institute. Bob will not be running again this year and I would be remiss if I didn’t offer him my/our heartfelt thanks for all he has contributed. The Board, with the exception of Lyndsey, Brian Antman, Brian Horlick and myself, are all new in the last couple of years and I can’t wait to see what fantastic new programs and projects come from this fresh new Board…..they still have that new Board smell! I am also glad to say that under the direction of the many Committee Chairs and the lead of Francesco Deo, we almost cleared the backlog of volunteers on our volunteer waiting list. All our volunteers are the heartbeat that keeps CCI-T moving forward.

While I will no longer be President, I’m not going anywhere soon. I will continue to support CCI-T at the Board level and then at the Committee level. Additionally,of course, I will always be around to support directors, managers and professional supporters of CCI-T and the industry as a whole. So, for the last time as President; I’m Murray Johnson, and this has been your condo connection!

Murray Johnson, OLCM, CCI (Hon’s), LCCI CCI-Toronto and Area Chapter President

Message

Condominium Authority Tribunal’s (CAT) Jurisdiction Has Expanded

Effective January 1, 2022, the Condo minium Authority Tribunal’s (CAT) jurisdiction was expanded to include disputes with respect to nuisance in volving noise, odour, light, vibration, smoke and vapour, as well as related indemnification provisions in condo minium governing documents.

As expected, this expanded jurisdiction substantially increased the number of applications to CAT. What was not ex pected was the number of daily notifi cations from CAT that lawyers/man agers/board members would receive with respect to these CAT applications.

The CAT was created to deal with dis putes between unit owners and condo minium corporations in an efficient and cost-effective manner. Prior to the ex pansion of CAT’s jurisdiction, I would say that this purpose was met, but not anymore.

The expected legal costs relating to a CAT application (including all three stages but not including expert witness costs, if any) are now typically in the range of $10,000 - $15,000.

A significant factor contributing to high legal costs is the voluminous no

tices and messages that lawyers must respond to while dealing with a CAT application. In addition to the excessive frequency of these messages, the time required to log on to the CAT portal, review the notice, and respond, is sub stantially more than the time needed to read and respond to a simple email.

Anyone who has been a party or has represented a party before the tribunal has experienced that his or her email inbox is inundated with notification emails from the tribunal. If you are a lawyer or manager handling more than one CAT application, then all the best to you in attempting to manage your inbox.

Yet another problem is that CAT fre quently operates with extremely short deadlines. Though most of the CAT members are gracious enough to grant extensions upon request, the frequent imposition of short deadlines can be taxing.

Lastly, the Rules of Practice (though amended recently) remain in need of further amendments pertaining to the admission and exclusion of evidence.

CAT applications have become too le nient in allowing irrelevant evidence

that has no bearing on the issues in dispute and that wastes time and legal resources in a manner that is dispro portionate to the underlying dispute.

With that being said, the CAT has cer tainly assisted a large number of unit owners and condominium corporations to resolve disputes. CAT applications are not as cost-effective as we would have expected them to be, but still in comparison to an application before the Superior Court of Justice, litigants can save a significant amount of costs.

More members need to be appointed to the CAT, and the email notification system should be replaced with regular email communication and hearings by video and telephone (as opposed to in writing), as is the norm in other On tario tribunals and courts.

Editor’s

Brian Horlick B. Comm, BCL, L.L.B., ACCI, FCCI

Case Law Update

Decisions From the Courts

Wong v. TSCC No. 1918, 2022 ONSC 3409

Ms. Wong resides on the ground floor and next to the garbage room which contains a compactor and is the termination point of the garbage chute used by all residents.

Soon after moving into the unit in 2010, Ms. Wong experienced loud noise and vibrations emanating from the garbage room. Complaints were made by Ms. Wong to Toronto Standard Condomini um Corporation No. 1918 (“TSCC 1918”) between 2010 and 2012.

In mid-2012, the Corporation, with the assistance of property management, un dertook some informal testing of noise levels and conducted meter readings. In mid-2013, the Corporation under took certain repairs to the compactor; however, such repairs were not to Ms. Wong’s satisfaction. Thereafter, TSCC 1918 posted a notice to advise residents to not use the chute overnight. While this minimized the disturbance to an extent, it did not resolve the issue to Ms. Wong’s satisfaction.

In early-2014, TSCC 1918 installed a checkpoint alarm light at the security desk which triggers whenever the compactor is jammed, running too long or running at night. Locks were also installed on the garbage chute doors to prevent overnight access. The solutions seemed to address the issue until Ms. Wong began work ing from home in 2017. In early-2018, TSCC 1918 engaged an engineer who recommended installing cement block in

the garbage room for further insulation. Other steps to reduce noise and vibrations were also undertaken at that time.

While the above steps minimized the noise, Ms. Wong continued to complain. TSCC 1918 subsequently agreed to engage a soundproofing company at its cost. The soundproofing company determined that the noise and vibrations were excessive and provided recommendations to address the issue. TSCC 1918 consulted its legal coun sel and a recommendation was made to peer review the report. Such peer review was done by an engineer and it concluded that the soundproofing company’s test was flawed and that the sound and vibrations were caused by a different issue.

In late-2020 additional noise testing was done by a different company and recom mendations were made to address the is sues. TSCC 1918 accepted this proposal but Ms. Wong did not agree that such proposal was adequate as she preferred the recommendations from the original soundproofing company.

Ms. Wong subsequently sought various orders in the nature of declaratory relief and damages under the oppression rem edy. The question to be determined by the Court was whether the Corporation’s re sponse to the complaints made by the unit owner were reasonable. Ms. Wong had the burden to prove that TSCC 1918 breached its statutory duties to maintain and repair the garbage system or breached her right to quietly enjoy her unit.

The Court held that the actions of TSCC 1918 were insufficient and oppressive. Of note, the Court stated that an “inexcus able length of time” had gone by prior to TSCC 1918 taking real steps to address Ms. Wong’s concerns. As a reminder, this matter had gone on for approximately eleven years. The Court noted that there were unacceptable gaps in time between the responses of TSCC 1918.

The Takeaway

As a matter of law, the obligation of a condominium corporation is to do what is reasonable in carrying out its statutory duty of repair and maintenance. There is no standard of strict liability or absolute perfection on the part of the condominium corporation in carrying out this statutory duty. Further, unit owners are not entitled to perfect silence.

TSCC 1918 clearly took steps to address the concerns of Ms. Wong; however, there were gaps in such steps and missteps along the way. Specifically, at one point in time, TSCC 1918 advised Ms. Wong’s lawyer that TSCC 1918 would not take further steps to address the noise/vibra tions “unless and until Wong rescinded this application”. The Court clearly took issue with this statement.

Additionally, condominium corporations must find meaningful solutions. If such so lutions do not remedy the deficiency, then additional investigations and steps should be taken in a timely manner. Any delays could expose a condominium corporation to risk.

Justin McLarty Partner

Miller Thomson LLP

Michael Prosia Associate Miller Thomson LLP

Jason Rivait Partner Miller Thomson LLP

Condovoice

Condovoice is published four times per year – Spring, Summer, Fall and Winter, by Redstone Agency on behalf of the Canadian Condominium InstituteToronto & Area Chapter.

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The authors, the Canadian Condominium Institute and its representatives will not be held liable in any respect whatsoever for any statement or advice contained herein. Articles should not be relied upon as a professional opinion or as an authoritative or comprehensive answer in any case. Professional advice should be obtained after discussing all particulars applicable in the specific circumstances in order to obtain an opinion or report capable of absolving condominium directors from liability [under s. 37 (3) (b) of the Condominium Act, 1998]. Authors’ views expressed in any article are not necessarily those of the Canadian Condominium Institute. All contributors are deemed to have consented to publication of any information provided by them, including business or personal contact information.

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Unreported Decision

In 2020, a condominium corporation (“Corporation”) faced the problem of a tenant (“Tenant”) who was creating a nui sance for other residents of the building in the form of excessive noise. The conduct was objectively severe.

The Corporation received a number of complaints from other residents of the building about the Tenant, and the Corpo ration made significant efforts to resolve the matter informally through demand letters by property management and its counsel. With informal resolution hav ing failed, the Corporation wanted to take legal action to have the Tenant removed from the building.

It is noted by background that the Tenant had a valid tenancy agreement with the owner of the unit where she resided, and the owner was in the process of attempt ing to evict her at the Landlord and Ten ant Board. Pursuant to Fraser v. Beach, 2005 CanLII 14309 (ON CA), the general law is that it is the Landlord and Tenant Board which has exclusive jurisdiction to evict tenants from their residential prem ises, unless a statute provides otherwise.

The Corporation ultimately proceeded with an application under s. 134 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”) for an order to evict the Ten ant, and in the alternative for an order for compliance against the Tenant.

The Court held that pursuant to s. 134(4) of the Act, a compliance order must be obtained prior to ordering the removal of the tenant from a condominium building. After the Corporation obtained the com pliance order, and the Tenant failed to comply, the Court ultimately granted the removal of the Tenant from the building, which was made enforceable by a private bailiff with police assistance.

The Court’s jurisdiction to remove a ten ant under s. 134 of the Act has since been confirmed in other lower court decisions, including MTCC No. 1260 v. Singh, 2022 ONSC 1606. There is no known appellate authority yet on this issue.

The Takeaway

Some tenants’ rights advocates have sug

gested that a condominium corporation is prohibited from removing a residential tenant under s. 134 of the Act, and that such removal can only be accomplished by way of application to the Landlord and Tenant Board. This position is not sup ported by the current law. The current law supports the right of a condominium corporation to remove a problem tenant from the building with the powers grant ed under s. 134 of the Act.

It is noted that the Act is in the process of being amended, with the removal of s. 134, and the addition of s. 135.1 and s. 135.2. These amendments appear to reflect the intent of the legislature to confirm a con dominium corporation’s power to remove a problem tenant, while explicitly prohib iting a unit owner from bringing such an application. If a unit owner wishes to have a problem tenant removed, the Landlord and Tenant Board will retain exclusive jurisdiction.

In addition to issues involving the remov al of problem tenants is the related issue of whether a condominium corporation can recover its legal costs for the application. There is law to suggest such legal fees can be added to the common expenses for the unit, even in the absence of any fault by the owner (See: Metropolitan Toronto Con dominium Corporation No. 933 v. Lyn, 2020 ONSC 196.)

MTCC No. 1260 v. Singh, 2022 ONSC 1606

Singh is a troubling saga of tenants who simply would not control their dogs. The tenants kept what were likely pit bulls in the unit. One of the dogs had previ ously attacked another resident and that resident’s dog, which resulted in an order from the City of Toronto that the dogs were to be muzzled in public.

The attack on another resident and their dog was simply the culmination of a long history of problematic behaviour on the part of both the dogs and the tenants. The tenants frequently failed to keep any control over the dogs and other residents were harassed and frightened by the ten ants and their dogs.

The condominium corporation com menced a compliance application and ob

tained an order from the Superior Court of Justice requiring the dogs to be re moved from the unit. The application was commenced after the Condominium Au thority Tribunal’s jurisdiction expanded to include pet issues.

The tenants did not comply with that court order and the Corporation sub sequently had to enlist the help of the Sheriff and Animal Services to have the dogs removed. The tenants were bellig erent throughout the process, including threatening the children of the Sheriff and threats to bring more dogs into the build ing and set them free in the hallways.

The Corporation had to return to court again, this time seeking the removal of the tenants. While the court would not grant an order at that time, it did order that the tenants were restrained from bringing any other dogs into the build ing without the permission of the court.

The tenants brought dogs into the unit once more and appear to have attempted to hide their presence. Despite the ten ants’ attempts to hide the presence of the

dogs, the Corporation was able to pres ent persuasive evidence to the court that established that the tenants had brought dogs back into the building, in contraven tion of the court’s previous orders.

The court ultimately granted the Corpo ration’s request to terminate the tenancy. As discussed in greater detail earlier in this article the termination of tenancies under Section 134 of the Act has been a contentious question and appears to be oc

curring more frequently as delays at the Landlord and Tenant Board continue.

The Takeaway

While the jurisdiction of the Condomini um Authority Tribunal (“CAT”) has been expanded to include a dispute with respect to pets, including disputes with owners and / or occupiers of units, a compliance application to the Superior Court of Jus tice remains an option when the issue triggers the provisions of Section 117(1) of the Act.

Singh is an important decision which reaffirms the availability of the Superior Court to address activities or conditions that pose a risk of injury or illness to other residents or damage to the property, re gardless of whether the broader catego rization of that activity falls within the scope of CAT’s jurisdiction.

Singh also highlights the high threshold that must be met to convince a court that tenants are not suited for communal liv ing, as an order to terminate the tenancy was not made until the two previous court orders had been violated.

The Corporation was able to present persuasive evidence to the court that established that the tenants had brought dogs back into the building, in contravention of the court’s previous orders

Patricia J. Parsons APR, FCPRS

Communications

Beyond the Newsletter

Strategic Communication for Condo Corporations

When film composer and conductor John Powell said, “Communication works for those who work at it,” he could have been talking directly to Board members in condo corporations. It’s probably safe to say that most individual Board members these days consider communication to be a high priority for their Boards, but suc cessful Boards know something that un successful ones don’t: it’s not enough to post minutes as required by regulation and occasionally slap together a newsletter. Maintaining and enhancing good relation ships with owners and residents is essential to the smooth functioning of both opera tional and strategic activities. And good relationships are predicated on a strategic approach to communication.

What Does “Strategic Communication” Mean?

The term strategic communication is most easily understood by examining its two components.

A strategy means articulating a longterm goal and delineating how that goal can be approached. Communication is of ten defined as a reciprocal process of ex changing information and ideas based on understanding shared meanings of words,

symbols and approaches. If that’s too aca demic for day-to-day applications, there’s a simpler way to look at it.

Strategic communication is goal-oriented, planned, deliberate and intentional. In ac tion, strategic communication includes the following elements: a plan for the opera tional, day-to-day communication of infor mational material to specific audiences and a long-term plan for communication activities that will contribute to the successful com pletion of corporation activities and the de velopment of positive community relations.

Posting minutes of meetings and distrib uting a newsletter occasionally do not constitute strategic communication. On their own, they will do little to enhance relationships or smooth the way to achieve Board goals successfully. Don’t misun derstand, though. Both Board minutes and well-planned and executed newslet ters certainly can be important tactics in a communication strategy. But that’s the point: you need a strategy.

Avoiding Seat-of-the-Pants Communication

Over time, a Board that faces few signifi cant problems can become complacent

about its relationships with its important publics. If the monthly complaints to man agement are minor, the budget manages to get by without complaint, and there are no shouting matches at the AGM, a Board can think it’s running smoothly. This attitude is what writers call pantsing: writing or in this case, running a condo corporation without a plan. I call it the firefighting ap proach to communication avoiding proac tive communication unless a fire breaks out.

For example, you might take the following views:

• We won’t bother to develop a dialogue with our owners until they threaten to call a meeting to oust us.

• We don’t need to consider how we com municate with owners regarding the budget until we need to implement a special assessment.

• We don’t need to carefully consider how we word email correspondence with in dividual owners and residents until one threatens to sue.

As I have written before, “Many problems that organizations face with their relation ships are a direct result of dealing with communication issues in a reactive rather than a proactive way.”

Strategic Communication

Requires a Plan

For over a decade, I taught the basics of com munication and public relations planning in a four-year university program designed to prepare future corporate communication and public relations practitioners. Every year, when presented with cases, students wanted to jump into finding solutions imme diately. Before gathering information or ask ing a single question, their reaction was to move directly to solutions. That illustrates the direct opposite of strategic planning.

Have you ever been confronted with a prob lem at a Board meeting only to find several directors leaping into the conversation say ing, “We should do this,” or “We should do that,” before the Board has a chance to define the problem? And defining the problem isn’t enough, either. The Board needs to know, among other things, who is most affected by the problem and what the objective of a solution will be. Strategic communication requires that and more.

When it comes to communication, the fol lowing pre-planning questions are key:

• Where are we now?

• Where do we want to go?

• How do we get there?

• How will we know when we arrive?

The answers to these questions for stra tegic communication planning require re searching the current climate, developing objectives for where you’d like to be, defin ing the strategies and tactics for achieving

those objectives and evaluating how well you’ve attained those objectives.

What Does a Communication Plan Look Like?

A strategic communication plan is based on the four elements I discussed above. Let’s apply these elements to a specific communication issue that arises yearly for every condominium board of directors: the annual budget.

It happens every year like clockwork. The Board nears the end of the fiscal year and begins the process of creating a budget for the following year. Successful budgeting requires three things: accuracy, fiscal re sponsibility and planning. But, during that planning process, does the Board consider how strategic communication to owners is included? (see table below)

Developing specific objectives for a plan is key to maintaining focus. These objec tives then provide the basis for developing targeted messages designed to imbue all communication tools regardless of the medium. Also, note that creating the tac tics that will form the implementation can be an exercise in creativity. The primary consideration will be the Board’s knowl edge of the demographics and preferences of its owner group. For example, a condo corporation with a younger demographic might be best served by providing much of that budget material via video rather than simply on a document and adding a private social media group for dialogue.

A Preliminary Communication Plan Might Look Like This:

Finally, the evaluation step is the most of ten ignored aspect of communication plan ning. It’s essential for the Board to know what works and what doesn’t to avoid what has failed and to capitalize on the oppor tunity to apply what worked in the future.

Outcomes of Strategic Communication Planning

One of the most beautiful aspects of a stra tegic process for communication is finding that a Board has significant support when more controversial issues arise. Building trust is one of the most important over all goals of communication planning. For example, when you find yourselves in the position of having to levy a special assess ment, an owner group that already trusts the financial knowledge and skills of its Board will be far more amenable, provid ing this communication strategy is imple mented well in advance, thus preparing the owners. Or if the Board is consider ing making a major change to a common element, such as repurposing an amenity room, prior communication and trust will go a long way toward smoothing that com plicated process.

When considering communication as a strategic tool, condo boards need to keep three characteristics in mind. Communica tion must be:

TIMELY TRANSPARENT

Audience

Owners Objectives

1. To increase owner knowl edge about the budgetary requirements in condos

2. To achieve owner ac ceptance of the required increase in annual mainte nance fees.

Messages

The board safe guards owners’ property values and financial contributions by taking its responsibilities seriously and following the budgetary re quirements set out in the Condo Act.

Tactics

Budget materials that include both a financial statement and a well-crafted explanatory document that provides a clear rationale for final budgetary decisions.

Budget town hall to provide owners with an opportunity to ask questions.

Evaluation Gauge owners’ reactions at town hall.

Conduct a postbudgetary owner survey. Monitor unso licited owner feedback for budget-related issues.

RELEVANT

Strategic communication is a Board’s pur poseful use of communication to achieve its objectives. A well-planned newsletter might well be a tool that helps achieve those overall objectives, but on its own, it does little more than pay lip service to a board’s responsibility to communicate with its owners. A board can achieve much more – it just needs to take the time to plan its communication activities.

Even Pablo Picasso said, “Our goals can only be reached through the vehicle of a plan. There is no other route to success.”

Joy Mathews BPHE, BA (Hons.), MA, JD Rutherford & Mathews, PC Barristers & Solicitors

Court Appointed Administrators

Callin’ In the Condo Sheriff! The Court-Appointed Administrator!

WARNING TO READER: This Condo Law Remedy is Extreme! Use Only When Necessary!

What is a Court-Appointed Administrator?

Dysfunctional. Dramatic. Drastic. Dis eased. These are some of the adjectives used to describe the extreme financial, social, and political circumstances that a condominium corporation finds itself in to justify the “remedy of last-resort” wherein a judge of the Superior Court of Justice appoints an administrator to take over all important condo decisions.

Instead of the duly elected directors man aging the affairs of the corporation, the court will appoint a representative who replaces all of the Board members and makes some (or all) of the decisions on behalf of the condominium corporation. This serious remedy is analogous to that of a court-appointed receiver in a commer cial, for-profit corporation context when a company is facing the existential threat of bankruptcy.

The court has made it clear on numerous occasions that a court-appointed adminis trator is a remedy of last resort since the Condominium Act, 1998 (the “Condomin ium Act”) is a piece of legislation which supports a regime of self-governance by owners, not judicial interference. As aptly stated by the court in Bahadoor v YCC 82 (2006),

“Self-governance is the norm; adminis trators are the exception.”

Although this remedy in the Condomini um Act is available to “save” condominium corporations from a toxic governance situ ation, it is not easy to obtain. For example, in MTCC 710 v Owners of MTCC 710 the judge issued the following warning or “wake-up call” to the owners in light of fi nancial problems and factionalism within the condominium community coupled with

significant governance difficulties:

“….I am imposing a two week “cooling off period”. I encourage the unit owners to put aside their personal disputes and obvious differences and to use the next two weeks to meet informally to try to come up with a realistic plan to address the real financial problems that are staring them in the face.

Hard decisions must be made – either sig nificantly cut expenses, or significantly raise common fees, or both. Inaction is not an

option. If the level of distrust amongst the unit owners is too high to permit reaching a solution, then perhaps they should think about appointing an administrator who can make the tough decisions for them. I will give the unit owners two weeks to engage in this kind of “reality check” and to explore a common solution.”

When Do You Need a Court Appoint ed Administrator? The Red Flags! Nevertheless, if you are a concerned unit owner or Board member and believe that your community could benefit (i.e., be saved!) from the appointment of an admin istrator, then you will need to learn how to do this and when it is necessary.

Since each condominium community has its own distinct set of issues, the first step in this process should always be to consult legal advice, preferably from a lawyer who has expertise in condominium law, and seek guidance whether this is indeed the correct path to resolve your particular gov ernance issues. Sound legal advice earlier rather than later can save you and your coowners considerable legal costs.

When is it necessary? Well, you want a list? Here are some issues that have resulted in this remedy: operating deficits of hundreds of thousands of dollars, millions of dollars in mortgages, illegal use of reserve funds to pay for things other than major repairs and/or replacement, unaudited financial statements, city work orders, unpaid wa ter charges, uncollected common expense arrears, underfunded reserve funds, lack of necessary repairs and maintenance, hostil ity and frustration amongst owners, serial requisitions to remove directors, verbal and physical threats, lack of adequate se curity, murders, overcrowding, widespread graffiti, poor garage lighting, misuse of operating funds, silencing of owners dur ing elections, proxy fraud, and creation of division amongst owners.

The above is not an exhaustive list and Sec tion 131 of the Condominium Act governs this process and requires that sufficient ev idence is presented by way of a court appli cation which is commenced in accordance with Section 134 of the Condominium Act. Your condominium lawyer will assist with reviewing and preparing affidavit evidence which will be presented to the court and

should demonstrate the significant issues for it to conclude the necessity of an admin istrator on the basis that “it would be just or convenient, having regard to the scheme and intent of the Act and the best interests of the owners”.

The key part is the phrase “just or conve nient” and, as mentioned, is not taken light ly by the court. In this regard, the court is permitted to order the specific role and powers of the administrator based on the evidence.

ministrator are reasonable based on the circumstances.

So, not all administrators are created alike and will vary from case to case.

The powers of the administrators may vary including the total length of the ap pointment term, the range of powers from narrow (e.g. managing the repair of spe cific common elements) to comprehensive (e.g. the administrators takes over all pow ers of the board of directors).

What will not change, however, is the fact that the administrators are officers and instruments of the court. Accordingly, the administrator must act honestly and in good faith, and it must deal with or manage the property of the condominium corpora tion over which it has power with the care, diligence, and skill that a reasonably pru dent person would exercise in comparable circumstances.

When Enough is Enough? How Do You Change or Stop The Administrator?

Once appointed by the court, the specific wording of the court order is critical and can only be overlooked at the owners’ peril – in other words: read the court order!

Whether or not you will be successful in an application for a court-appointed adminis trator is based on a careful consideration of the nature, causes and impact of events over time. Specifically, the court has found several problems in the affairs of condo minium corporations which may justify the appointment of an administrator such as:

1. A demonstrated inability to manage the corporation;

2. Substantial misconduct or mismanage ment;

3. The appointment of an administrator is necessary to bring order to the affairs of the corporation;

4. The presence of a struggle within the corporation amongst competing groups that impedes proper governance;

5. Whether the appointment of an admin istrator has any reasonable prospect of bringing to order the affairs of the cor poration; and,

6. The costs-benefits of appointing an ad

For example, the court admonished an elected group of owners who were clearly misguided thinking that they were in con trol. First, the court order stated that the administrator’s power was as follows, “to manage the affairs of [the condominium corporation] as if the administrator were the Board of Directors….and in place of the Board of Directors…., whose powers be and are hereby suspended, until further order of this Court.”

The attempt of the elected board to remove the administrator fell on deaf ears as the court stated,

“Let me comment on how the four moving unit owners described themselves. In their materials they styled themselves as the “Elected Board of Directors”. With re spect, they are not. Since the appointment of the Administrator on August 28, 2006, the powers of the Board of Directors have been suspended. The court has not given permission to hold formal elections for a new Board of Directors. Accordingly, at

The administrator must act honestly and in good faith, and it must deal with or manage the property of the condominium corporation over which it has power with the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances

the present time no Board of Directors exists….elected or otherwise.” [empha sis added]

Although in many cases the condominium corporation brings the application for a court appointed administrator, the owners can present their own story to the court and persuasively argue for their preferred administrator. It is noteworthy that the the legal test to have a replacement of an administrator is the same as that of the appointment. For instance, in MTCC 856 v. All Unit Owners and Mortgagees of MTCC 856 (2011), the owners were con cerned that “we sense some connivance between the Board, management and the Administrator” which resulted in the court agreeing to the appointment of an admin istrator chosen by the owners.

Terminating the administrator will not be straightforward and requires consid eration of the impact on other interested persons, including the corporation’s credi tors and, depending on the circumstances, any entities such as fire or building services (if the building structure is compromised due to disrepair).

How To Avoid a Court-Appointed Administrator?

Retrospective analysis of previous court cases in which a court-appointed adminis trator was ordered yields very important and useful insights to help future condo minium communities.

Here are some common themes:

• Owner Apathy: A common back ground to most cases is owner apathy and lack of effective participation. A successful condominium relies on own ers actively participating in the selfgovernance of the corporation. In this regard, the Condominium Authority of Ontario (see: https://www.condo authorityontario.ca/) provides a useful database of very common issues that a typical owner and condominium corpo ration will encounter.

• Board Transparency: Maintain ing the Condominium Act minimum disclosure obligations is just that: the minimum standard. Although not nec essary, it would be useful to all owners that its elected board of representatives

engage the community and provide useful information on a timely basis to avoid owners’ anxiety and increase participation.

• Deferring Repairs and/or Main tenance: Unreasonably delaying or deferring major repair and/or mainte nance of common elements is an easy way to create governance issues in a condominium corporation. If common element maintenance fees are also kept artificially low, coupled with delaying important maintenance decisions, serves only to postpone difficult deci sions and leads to an adversarial envi ronment for the future condominium community.

• Ineffective or Non-Existent Man agement: Condominiums have be come sophisticated regulatory entities and the ability to self-manage may still be available for some communi ties, but most require the professional expertise of a licensed condominium property management company. Man agement companies, although licensed, are subject to market driven forces and not all managers have the same level of expertise. A property manager that is not attending to the needs of its community may cause harm that can only be measured and weighed in the future. The Condominium Manage ment Regulatory Authority of Ontario (see: https://cmrao.ca/) regulates all licensed property managers in Ontario and ensures that certain industry stan dards in the condominium industry are maintained.

The above is not an exhaustive list of common problems which may erode good governance in a condominium. There is indeed no one issue that causes the ero sion, rather a matrix of various unresolved issues. An engaged ownership and Board being mindful of the social and political milieu that creates a toxic condominium culture is the first step to avoiding the need for this dramatic remedy.

The remedy of a court-appointed admin istrator is not often used but much needed to protect all owners and is another tool in the toolbox of condominium self-gov ernance.

Michelle Wallace-Carswell Sales Manager Design Roofing

Condominium Maintenance

Minor Repairs Stretch Roof Life and Save Reserve Funds

Simple Upkeep Items that Prevent Surprises and Early Roof Replacements

Finding ways to keep an adequate reserve fund is critical. Regular maintenance pre vents major repairs and surprises down the road. We know this, right? With owners’ eyes on hallways, elevators, landscaping, and plumbing, it is easy to forget about the roof, that common area that covers the whole building.

Maybe a roof replacement seems far off in the future, or maybe you’re trying to buy a few more years with band-aid repairs. Or maybe there is a problem that just hasn’t been detected yet. The one thing that is for certain: everyone wants to protect their investment.

The roof makes up a relatively small per centage of the physical material, but it protects 100% of the building. Most re pairs are done because of water damage, whether it’s a sudden flood, or a slow leak that no one notices for years. When water hits the roof, it needs to be repelled away from the building or it will find its way to the roof deck, the ceiling, walls, carpets, even the basement. It can destroy the build

ing structure right down to the foundation. Water attracts vegetation which pierces through layers of the roof system with their roots; it attracts mould growth as soon as it hits any carbon-containing material. Pest infestations, electrical damage, hazardous conditions, the list goes on. Usually you can trace the problem back to one critical ingredient: water.

Regular Roof Inspections

All this can be avoided, or at least mini mized, by getting the roof inspected at least once per year. Routine repairs protect everyone’s investment by preventing mate rials from breaking down and failing, and damage spreading and becoming more and more serious. A roof maintenance plan adds years to the life of a roof.

Always get a professional roofing contrac tor to inspect the roof. They are safety trained for working at heights. They know better than anyone, what to look for be cause they have seen it many times.

Here are the main areas that require regu

lar minor repairs to keep your roof in top shape and maximize its life.

1. Remove Debris from Roof Surface and Eavestroughs

Debris throughout the roof surface pre vents the free flow of water to the drains. It also absorbs moisture and weighs heavy on the roof over time. Typical debris found on roofs consists of leaves, tree branches, any object that can be picked up by the wind like plastic bags and packaging, things that are growing like weeds or moss, and anything from the roof itself, like lint from vents, piece of broken shingle or shards from an HVAC unit and such.

Eavestroughs are hugely important. When blocked by excess debris, they provide an excellent breeding ground for weeds and a perfect home for wasp nests and other small creatures. Water also erodes build ing material and the ground around it.

2. Ensure Proper Drainage

Drains should be properly checked and cleaned. An ill-fitted drain or eavestrough

guard can do more harm than good. An experienced roofing technician can easily decipher the right protection from wrong. They will know exactly which cover should be used in each situation.

Some people underestimate the impor tance of eavestroughs. They need to be at tended to regularly because they protect people outside the building by funneling water away.

3. Repair or Replace Damaged Flashing

Flashing is used to protect areas of the roof where major parts join, like the roof edge, large vents, chimneys, HVAC units, etc. It diverts water away from the areas where water is most likely to get in.

Over time, even galvanized steel roof flash ing corrodes and needs to be repaired or replaced. Other common ways flashing gets damaged is by hail, hot temperatures, woodpeckers, and very high winds. Flash ing could have small holes that are im possible to detect from the ground. They could even come loose and actually detach if neglected.

4, Examine Roof Surface

Any surface, from shingles to granules to stones, needs to be looked at carefully because that top layer is protecting the roof membrane. Hot summer sun dries that outer layer and it expands in the heat. If it cracks, the layers below are exposed.

An inverted, sometimes called upside down roof system is popular in the GTA. In this type of roof, the membrane layer is covered by roofing insulation and filter cloth and then either gravel ballast or paving stones. Often the membrane itself is not UV resis tant and having these layers above helps to protect it. If the roof membrane is damaged, those layers must be moved or swept back. There could be broken down or damaged insulation, sometimes filter cloth is miss ing. This all requires a repair and the lay ers properly arranged. Without this simple repair, the building would lose heat and the membrane would be vulnerable to damage.

5. Reinforce Caulking and Sealant Sealant and caulking must be monitored

on a regular basis to ensure that it’s not deteriorated to the point where you have splits and cracks. That’s how water gets in.

Deterioration can be found at any roof penetration like skylights, vents, pipes and chimneys. It’s necessary that each penetra tion is properly sealed to prevent moisture and water ingress. Some vents don’t even have any caulking and need to be sealed. Deteriorated sealant can be disposed be fore applying new caulking.

Rust is common on roof systems and is of ten found at the HVAC unit vents and gas lines. As part of a maintenance program, a roofing contractor would apply a pro tective coating to help inhibit any further rusting, or a yellow rust inhibiting safety paint if it’s a gas line. If neglected, this rust ing leads to corrosion. Once corroded, a roofing contractor cannot repair it and the associated technician has to attend. This is a simple example of how a minor repair now saves time and money later.

Important Tips

Safety comes first: If workers aren’t prop erly trained in ladder safety and hazard identification, the condo corporation is at risk. Anyone working on a roof must have proper fall gear and personal protective equipment. This protects the owners if something does go wrong.

Inspecting the roof from the ground can be helpful for checking downspouts and soffit,

Sealant and caulking must be monitored on a regular basis to ensure that it’s not deteriorated to the point where you have splits and cracks.

That’s how water gets in.

but even with a ladder, there is no way you can inspect all the crucial spots. Getting on the roof and looking closely is the only way to actually inspect it. There could be a rusted nail in a shingle or a drain clog you can’t see unless you’re above it. Drone inspections are very helpful, but you can’t feel with your hands or pressure test.

Weather and Your Roof

The whole point of a roof is to protect you from the weather: That is the roof’s job. But weather is harsh and it does cause wear and tear, even damage. Weather events are becoming more common.

The most damaging weather for roofs:

1. Hot blistering sun

2. Super strong wind

3. Hail

4. Temperatures fluctuate above & below freezing, repeatedly, within 4-6 weeks

Sound familiar? This cycle of weather creates the “perfect storm” for roof mem brane issues. The sun dries and expands the membrane, then wind blown debris and hail hit causing damage, the melting and re-freezing of ice in those damaged little nooks and crannies, all lead to the items listed above that need to be checked and refreshed each year so they can take on another round.

Preventing Roof Leaks

Preventative roof maintenance involves a meticulous assessment of the roof, check ing for any kind of deterioration in the roof

membrane. Small rips, tears and splits are easy to miss so it is important to have a professionally trained roofing contractor do the inspection.

A knowledgeable roofing contractor will look for nearby hazards that will surely threaten the roof when the wind rolls in. Nearby electric lines and low-hanging tree branches that have stood the test of time will eventually weaken.

The Roof Protects So Much

This handy list of reasons to take care of your roof:

Roof Maintenance is

• Frequent leaks and need for repairs

• Structural damage due to leaks and rot ting

• Framing underneath the roof mem brane

• Building structure

• Balcony membrane weakness

Collateral damage due to leaks

• Interior finishings, floors, walls and furniture

• Light fixtures and fire alarms

• Mold growth in carpets and other af fected areas

Increased Costs

• Structural repairs

• Emergency repairs

• Replacement of damaged interior items

• Inability to occupy

• Increased insurance deductibles

• Lower resale value

Risks and Liabilities

• Potential slip and fall conditions due to leaks

• Failure to comply with Condo bylaws

• Damage to tenants’ property

• Roof membrane manufacturer war ranty after a new installation

A roof will not exist to its expected life without upkeep because weather affects it. Roof maintenance identifies small issues before they become much larger problems.

Key

Structural Consequences and Disruptions

• Accelerated deterioration of the roof

What would you prefer: regular minor re pairs or an expensive surprise and early roof replacement? C V

Roof maintenance identifies small issues before they become much larger problems.

What would you prefer: regular minor repairs or an expensive surprise and early roof replacement?

And the Winner is... Wait, What, Again?

The answer, quite simply is, The Landmark III of Thornhill (the “Landmark” ). Win ner of two Canadian Condominium Insti tute – Toronto and Area Chapter ( “CCIT” ) prestigious designations: 2017 Condo of the Year ( “COTY” )and 2020 Condo of the Decade ( “COTD” ). This article was written by the Board of Directors, ( “the Board” ) with the assistance of manage ment and owners. [Disclosure: two of the Board, Farzad Lahouti and Eric Lakien are directors of CCI-T, having been elected to the CCI-T Board of Directors subsequent to the Landmark winning the COTY and COTD awards.] Let’s explore this condo and what the awards have meant to us.

Background

Built in 1991 as the third building on a 24-acre site located in Thornhill, in the City of Markham at Bayview and Green Lane, Greywood Construction erected a first-class building, consisting of 12 floors, and 268 suites. Having planted a large number of trees, shrubs, and flowers and with lots of green space, the property can be favourably compared to a Garden

of Eden. Certainly, lots of space for our owners and residents to enjoy themselves in the park-like setting. Less than 10% of the units are rentals, which speaks to the fact that our owners want to live here.

There are very few units listed for sale, and when one comes on the market, it is quickly snapped up. Over the years, the five-member Board and management have carefully maintained and upgraded the ex tensive amenities our residents enjoy.

The Path to the Awards

The COTY and COTD awards probed the following facets of the condo:

• Community engagement

• Governance

• Communication

• Education

• Physical property management

• Finances

• Sustainable practices

• Unique aspects

Landmark was able to successfully dem onstrate a high quality in each of these aspects. However, what we derived from

the awards meant even more to our com munity:

• Enhanced spirit of comradery and pride among owners and residents

• Community and government aware ness of the condo

• CCI recognition, including a Condo voice feature article

• Sale listings cite the awards, a badge of quality and sound management

• Increased resale value of units

Perhaps most importantly, the applica tion was used as a framework to diligent ly review and analyze all aspects of our condo and its management to see why we had success, and to ensure we would continue to succeed.

Board members with different skill sets, experiences and backgrounds have one important goal in common: make our condominium the best it can possibly be. The Board functioned, along with man agement, as a smoothly coordinated team that ensured that the condo remained in

What is an Award Winning Condominium, You May Ask? How About a Condo that has Won Two Accolades?

YRCC 798 – Landmark III of Thornhill

Farzad Lahouti Board of Directors Landmark III

BY JAMIE BENNET

Eric Lakien Board of Directors Landmark III

Dedicated to the memory of our long-serving President, Bernie Betel 1936 to 2022

top notch operational shape. The hard work in preparing both applications and related backup for the awards really paid off for us. Our Board has four aims – Safety [especially important through out the pandemic], Communication, Transparency, and Operational & Fiscal Responsibility. The two awards we won certainly reinforced these goals to our owners – they also gave them external validation that we were acting in their best interests, and those of our owner community. They were thrilled to learn of our awards, and we’ve stimulated a great sense of pride of ownership! Not to mention making our condo a most desir able Markham address.

Community Engagement

We noticed an increased pride of owner ship and a commitment to support the Board and management. Let’s hear from some of our owners:

“The Landmark III Board and property management team is very hands on and laser focused on managing our budget, ensuring top notch results on building projects, while keeping our fees to man ageable levels. The numerous upgrades to our building’s amenities have resulted in a building on par with today’s newer build ings, making the Landmark the choice of mature buildings for prospective owners.”

JL

“Imagine, for close to 30 years I had lived on a 4-acre retreat in the woods of An caster, in a beautiful home surrounded by forest, hills, a stream, and an enchanting

array of birds and animals. The move to Landmark was something I feared, as it would involve moving into a condo apart ment. To my delight, instead of a traumat ic experience, the contrary occurred as I found a new and wonderful home, man aged amazingly with a devoted board, a great staff, friendly neighbours, a great variety of excellent amenities and all in a beautiful modern building,...yes, I had found home.” JS

“The upkeep and running of our wonder ful building and surrounding three-acre park-like setting, along with our Spalike facilities, which includes a Swim ming pool, Sauna, Gym, Tennis Court, Squash Court, Billiards Room, Party Room, Movie Theatre with reclining leather seats, Library and Guest Suite, are the envy of anyone visiting 7905 Bayview Avenue and a source of pleasure and pride for all of us residents. All this would not be possible without the superb management of our office manager Alex ander Vainshtein, thank you Alexander. We are grateful to all who contribute to the smooth running of our building; may we all continue to build on this place we call home.” CR

“Living at Landmark has meant meeting my neighbours of various ages and cul tures in our community. Playing tennis and pickleball with many new friends, taking advantage of the wide range of amenities, and just strolling our beautiful gardens are a bonus of ownership. I have full confidence in our Board, who works tirelessly for all of us.” EF

“I feel like I am living in a luxury hotel at a tropical resort with all the beautiful foliage and surroundings. The directors are great and the condo is managed im peccably.“ AB

“I am impressed by the vision of the condo Board and it’s commitment to maximiz ing our resources for the benefit of all resi dents and not just a select few.” AS

“Landmark is a beautiful building with many desirable amenities. We’re proud owners and thoroughly enjoy living in the building. The Board are focused, con scientious, responsible and is dedicated. Landmark’s property management are second to none. Their maintenance pro gram is proactive and the building’s in frastructure is kept in pristine condition. The cleaning staff work hard to keep all areas of the building spotless. The fi nances of the building are exceptionally well managed and monitored. Budget projections seem to be accurate and the expenses are kept in check. The Board and management are transparent and we are always kept informed of all aspects of the buildings operation.” MK

“First and foremost are the friendly peo ple who live here and the same for the security and cleaning staff. The building itself is kept up to date and in immaculate condition due to an exceptional Board of Directors and a solid building Manager. Also, at what other condo can you walk out the door and step into a beautifully maintained 24 acre park including a cir cular walking path?” MS

L to R: Alex Vainshtein, Manager, Sami Hamam, Treasurer, Farzad Lahouti, Director, Stephen Pollishuke, Director, Bernie Betel, President, Eric Lakien, Secretary

Community and Government Awareness

Members of the Markham Council attend ed award presentation ceremonies, and even recognized the Landmark at a Coun cil meeting. This community wide recog nition has led to the Landmark, along with the other two Landmark buildings, having a full seat at the community table. Along side local ratepayers’ organizations, we are involved in issues beyond our campus. We have a direct path to our local Councillor.

Real Estate Recognition

The COTY award certainly has positive property value ramifications. The Land mark III received its first award in 2017 and its COTD award in 2019. Condo val ues in our building increased by more than 50% on average when comparing three years before and after the award was given even though there was a market value drop in the second half of 2017 until end of 2018.

While it is difficult to correlate a direct ef fect of a condo having received the award to its immediate property value increase, it can certainly be stated that the CCI-T award has an excellent market reputation effect. Real estate professionals use the award to further boast about the awardwinning condominium building in their listings and potential buyers consider the award an evaluation source to make a con fident purchase.

Management

We are very fortunate to have Alexander Vainshtein and his team at Malvern Prop erty Management act as the condominium manager at Landmark. The awards rein forced his commitment to excellence. In fact, Alex was awarded the Association of Condominium Managers of Ontario Man ager of the Year award in 2019. It was only fitting that a CCI-T recognized condo have a manager to match! In his words:

“The CCI-T’s awards are very significant for me. The awards honour the full team: the board of directors, the residents and owners, Malvern Property Management’s team behind us and even me. The awards are also a result of the many competent contractors providing services to the building. As the condominium manager, I have to interact with all these people, and serve as a path to the Board who make

the final decisions. In summary, there are a host of people and companies that the awards honour. We all form a team, with our efforts united in the best interests of the Landmark community.”

Conclusion

The benefits of our two awards are many. Our owners and residents are indeed fortu nate to have chosen Landmark III of Thorn hill. Come up and visit us anytime!

Yulia Pesin Lawyer Deo Condominium Lawyers

Insurance

Navigating the Chargeback Matrix

Leaking Toilets, Fires, and Everything in Between

Kai Zachary and Clara Rose from unit 5819 decided to get away for the week end, leaving their condominium unit unattended for two days. Unbeknownst to them, the toilet valve in their ensuite bathroom was deteriorating for some time. As the laws of the universe will have it, the toilet valve broke down during Kai and Clara’s weekend getaway. Water quickly filled the ensuite toilet and over flowed onto the unit’s bathroom floor.

Four hours later, Kai and Clara’s unit was flooded with water, as were seven other units below and four units adjacent to theirs. The condominium’s emergency remediation and repair costs for the wa ter damage totalled over $100,000.00. Thankfully, the condominium had water escape insurance coverage, albeit it car ries a $25,000.00 deductible. As is com mon in these circumstances, a dispute arose between Kai and Clara and their condominium, as to who was responsible for the cost to repair the flood damage and to what extent.

The condominium manager, Ms. Sophia Aubree, at the direction of the board of directors, issued a chargeback letter to Kai and Clara, seeking reimbursement

of the $25,000.00 deductible. Kai and Clara, however, were adamant that they cannot be held liable for the deductible amount. After all, they were not at fault! How were they to know that their toi let valve was deteriorating and would breakdown on their weekend away? The dispute between Kai and Clara and their condominium quickly escalated, with both parties retaining counsel.

Many of us in the condominium industry know the above scenario to be a “condo classic”. Neither the factual circumstanc es nor the legal framework of charge backs are new. Yet, the interpretation and application of chargebacks contin ues to cause much confusion for condo minium managers, board members, and unit owners alike. Much of this has to do with the intricate and technical nu ances of chargeback provisions and their

broad interpretations depending on the precise wording of the provisions in the Condominium Act, 1998 (the “Act”) , the declaration and by-laws of the corpora tion. Below, we breakdown some of these technical nuances and dispel much of the confusion surrounding chargebacks.

Section 105 of the Act governs insur ance deductibles. Subsection 105(1) of the Act provides that if a condominium’s insurance policy carries a deductible, the amount of the deductible shall be a com mon expense. This subsection applies to scenarios where the damage is either caused to a condominium’s common ele ments and/or originates from the com mon elements (e.g. hallways, stairways, lobby, recreational facilities, parking garage etc.). In this circumstance, the condominium’s insurance company will pay for the repair costs to the common el

BY CLAYTON HANMER

Publisher’s Note: A corrected version of this article has been republished in Condovoice Fall 2022 due to a printing error in Condovoice Summer 2022.

ements and/or any affected units, howev er, the condominium will be responsible for the cost of the insurance deductible. The insurance deductible amount would be deemed a common element expense shared by all units.

Subsection 105(2) of the Act states that if an owner, a resident, or guest of a unit, causes damages to the own er’s unit, through an act or omission, the amount that is lesser of the cost of repairing the damage to the unit and the deductible limit, shall be added to the owner’s unit as a common expense. Thus, sub section 105(2) of the Act, has two qualifications:

(1) The chargeback can only be applied to the cost of repairing the unit from which the damage origi nated (the “Origin Unit”) and cannot be applied to the cost of repairing any other units and/or com mon elements which were damaged; and,

(2) The chargeback can only be applied if the corpora tion can establish neg ligence on the part of the owner, resident, or guest of the Origin Unit by showing that an act or omission by the owner, resident or guest has caused and/or resulted in the damage.

In Kai and Clara’s case, pursuant to the provisions of the Act, the corporation can issue a chargeback only for the cost of repairs made to Kai and Clara’s unit (but not for the cost of repairs to any of the other 11 affected units or the affected common elements if there is no insurance deductible by-law). Furthermore, if there is no insurance deductible by-law, in or der to issue the chargeback, the corpora tion will first need to establish that Kai and Clara either did something or failed to do something, which had caused and/ or resulted in the leak.

Condominium professionals and unit owners are often under the mistaken be

lief that a condominium can only issue a chargeback to the Origin Unit if the condominium submitted a claim to their insurer for coverage. Thus, there is a common industry misconception that if a condominium chooses to forego submit ting the claim to its insurance company and instead pays for the repairs to the Origin Unit outright, the condominium is barred from issu ing a chargeback to the Origin Unit. In fact, however, a con dominium’s right to chargeback the Ori gin Unit for damages sustained in the Ori gin Unit is not con tingent on the condo minium submitting the damages claim to its insurer. As long as the condominium paid for the damages to repair the Origin Unit and is able to es tablish an act or omis sion on the part of the Origin Unit owner, resident or guest that either caused or re sulted in the damage, the condominium can chargeback the Ori gin Unit the cost of repairing it, up to the condominium’s insur ance deductible.

In Kai and Clara’s case, subsections 105(1) and 105(2) of the Act do not as sist the corporation much. After all, as a result of the flood that originated in unit 5819, eleven other units and the condominium’s common elements were damaged. The repair costs to unit 5819 are negligible and well below the cost of the corporation’s insurance deduct ible, compared to the repair costs to the other units and common elements that were damaged. In addition to that, the corporation has no evidence that Kai or Clara did anything or failed to do any thing which caused their ensuite toilet valve to break and result in the flood.

Luckily for the corporation, subsection 105(3) of the Act provides that a con

dominium may pass a by-law to extend the circumstances listed in subsection 105(2), under which the condominium can issue a chargeback to the Origin Unit (from where the damage origi nated). Ms. Aubree, being the diligent condominium manager that she is, turns to the condominium’s governing docu ments for a search of a deductible by-law. In today’s age, most condominiums have some form of a deductible by-law in their governing documents. Unfortu nately, however, we often find that these by-laws are either poorly drafted or fail to fully extend the application of the de ductible chargeback by removing all the qualifications listed in subsection 105(2) of the Act. Specifically, the wording of subsection 105(3) enable a condominium to pass a by-law that:

(1) Allows the condominium to charge back the Origin Unit not only the cost of repairs to the Origin Unit but also the cost of repairs to any other affected units and/or common ele ments, up to the Corporation’s insur ance deductible amount (irrespective of whether the condominium submit ted the claim to its insurer); and,

(2) Allows the condominium to charge back the Origin Unit for the cost of repairs up to the cost of its insurance deductible irrespective of any act or omission on the part of the owner, resident, or guest of the Origin Unit.

Thus, with a properly drafted insurance deductible by-law, all that the corpora tion will have to establish to issue the chargeback to Clara and Kai is that the flood originated from their unit. The corporation will not have to limit the amount of the chargeback to the cost of repairing only Clara and Kai’s unit, nor will it be required to prove any act or omission by Clara and Kai that either caused or resulted in the flood.

A properly drafted chargeback by-law that extends the application of a charge back to the fullest limits permitted by subsection 105(3) of the Act will benefit a condominium corporation in a multi tude of ways. For one, a properly drafted chargeback by-law will simplify Ms. Au bree’s role in applying the chargebacks.

The wording of subsection 105(3) enables a condominium to pass a by-law that allows the condominium to chargeback the Origin Unit for the cost of repairs up to the cost of its insurance deductible irrespective of any act or omission on the part of the owner, resident, or guest of the Origin Unit.

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Ms. Aubree will know that anytime that dam age occurs in the condo minium that arises from a unit, she can chargeback the Origin Unit for the cost of the repairs to any portions of the building, up to the condominium’s insurance deductible. A well drafted chargeback provision will also al low the condominium to recoup larger and more frequent chargebacks from unit owners and, therefore, protect the corporation’s financial viability. Furthermore, a well-drafted chargeback by-law may also reduce the corporation’s insur ance premiums in the long run.

Corporations that choose to pass an insurance deductible by-law are also encouraged to inform and ed ucate their unit owners on insurance

deductible coverage. An insurance deductible cov erage is a standard form insurance policy that is available to unit owners to cover the cost of the condominium’s insurance deductible. In Kai and Clara’s case, the corpora tion issued a chargeback on the basis of the con dominium’s well-drafted chargeback by-law, which allows the corporation to chargeback the cost of the $25,000 deductible to Clara and Kai irrespec tive of their negligence (i.e. an act or omission that either caused or re sulted in the leak). Luck ily, Kai and Clara have an insurance deductible policy, which will pay out the $25,000.00 deduct ible chargeback issued to them by Ms. Aubree, on behalf of the con dominium. Customarily, the deductible amount of owner-purchased insurance

deductible policies is $1,000.00 (versus the corporation’s insurance policy which carries a significantly larger deduct ible). Accordingly, a properly drafted chargeback by-law will close the gap on uninsured losses and help the corpora tion and its owners save significant costs over time.

For condominiums that do not yet have a chargeback by-law, we encourage the boards of directors and condominium managers to consider amending their corporation’s governing documents to include a chargeback by-law. For con dominiums that have a chargeback bylaw already, we encourage the boards of directors and condominium managers to review the by-law and ensure that it extends the application of the charge back to the fullest extent permitted by subsection 105(3) of the Act. A properly drafted insurance deductible by-law will quickly pay for its upfront invest ment by crystalizing the application of the chargeback, simplifying enforcement of the chargeback and maximizing the corporation’s recovery of chargebacks in the long term.

For condominiums that do not yet have a chargeback by-law, we encourage the boards of directors and condominium managers to consider amending their corporation’s governing documents to include a chargeback by-law

Edmund Leong CPA, CA Tator, Rose & Leong Chartered Professional Accountants

Cover Story

Condo Lending

A Push for

Consistency, Transparency & Clarity

It is no wonder with record inflation, la bour disruptions, supply chain shortages that condo lending has been more popu lar than ever. Condo lending is really the industry’s easy button when it comes to financing rapidly rising costs for major repairs and replacements without having owners go though large special assess ments and brings needed repairs to the corporation faster than internally financed options. I have found that the downside of much of the lending is various parties’ un derstanding of complex accounting disclo sures and presentation.

Let’s walk through the life of the condo loan and where it would impact the audited statements. When the borrowing by-law has been passed, the board can then engage a condo lender to lend the necessary funds to conduct the major repair. Typically, condo lenders will be paying the contrac tor directly for the repairs up to the agreed upon amount as set by the loan agreement. As this may cross the financial year end of the corporation, the final amount of the loan may not have been fully advanced due to the progression of the repair. Property management accountants should be track ing the amount of the advances made by the lending company and in turn at the fiscal year end the corporation should disclose the amount of expenditures made in the reserve fund (more on this later) and at the same time, a liability should be booked to the condo lender for the amount advanced as a short term loan. The condo lender should be able to provide the progress payment

details both for property management ac countants and the auditor to review. Note: disclosures should be made to the audited statements to indicate the terms of the loan and that the final loan amounts will be set up once the final repair work has been com pleted. The total loan should be disclosed as part short term loan and part long term loans. The short term portion of the loan represents the principal portion of the loan due a year after the financial statement date.

The reserve fund should now reflect the total expenditures made to repair the com mon elements and the loan balance should reflect the full balance owing to the condo lender. As you can appreciate, the reserve fund has been hit with a massive charge

sometimes in the millions with the repair work and can put a low running reserve fund into a deficit. The owners, managers, board will raise the issue as to why and how the reserve fund is running a nega tive balance. It has been our practice in this case to segregate the condo loan into a separate reserve fund called condo loan fund. The balance in this condo loan fund will be a negative figure (ie negative eq uity) and will correspond to the loan figure in the balance sheet.

The next confusing matter is how the monthly payments to the condo loan are dealt with amongst the statement of opera tions, statement of reserve and statement of condo loan fund. We have seen property

management classify the loan payments out of operations which is not factually cor rect as the loan is a reserve fund matter. So let’s take a few steps back to figure out how the loan is paid. During the proposal process of the loan, owners are presented some “what if” scenarios of how much their condo fees would increase as a result of this loan. Let’s be realistic as you can not expect that loan payments cannot come out of thin air. The debt service will likely come out of additional common element assessments unless management and the board can carve it out of other expenses. Where funding comes from the owners additional assessments, it is in my opinion that a new reserve fund study should be conducted by the engineers which factors in for the term of the loan’s increased fund ing for the debt service. The engineer’s study would have only accounted for the cost of the major repair or replacement and a new study would be needed to cover the cost of the interest. So if we have increased condo loan funds outflow where does that money come from? That would of course be higher condo fees and in turn higher ap propriations to the condo loan fund.

So let’s take it from the top with the state ment of operations. The condo fees would have been increased and the appropria tions to the condo loan fund increased as a flow though effect of the cash required for the debt service. End of story and no confusion that operations are paying for the condo loan.

Then let’s move onto the statement of re serve fund. The running balance in this loan, in theory, would also run alongside the engineer’s report for major repairs and replacements. The statement should also be positive equity and as well be comparable to the engineer’s 30 year cash flow plan.

We now move to the statement of condo loan fund which, as stated above, shows a large negative figure (negative equity) equivalent to the loan balance in the bal ance sheet or statement of financial po sition. Here is where we get to allocate principal and interest. We will see that the expense of this fund will be the inter est portion of this loan and then the bal ance that gets dropped out is the principal

portion of the loan. This principal portion then reduces the negative loan fund to the ending balance in the loan amortization table. Owners, the board and manage ment can see then with clarity that the ending loan fund agrees to the liability in the statement of financial position.

The convergence of Condominium Act, fund accounting, appropriations, disclo sure, revised engineer studies, loan me chanics has made this article seem more complex than it is. However, where if the transactions are not properly tracked or disclosed consistently in the monthly financials or in the annual audit, it will cause boards, owners and management to lose transparency of the cash flows and as well create a high level of confu sion. The confusion is enhanced with new and existing owners who have not had the opportunity to have the financials explained to them in detail. The auditor should enhance clarity by using good financial statement note disclosures and by explaining how the flow of cash moves from condo fee to debt service through all the statements at the annual AGM.

Neil Jenkins President of Townhouse Condominium Corporation and CCI-T Member

Our Environment

Trees and Your Community

Strategies for Sustaining the Health of your Trees and Reserve Fund

Trees ought to receive greater attention from condominium corporations. They contribute tremendous benefits to our com munities: improved air quality, reduced en ergy consumption, reduced noise pollution by acting as sound barriers, captured water run off to reduce flooding, and increased property values resulting from improved “curb appeal”. In spite of these benefits, trees are often overlooked assets for condo minium corporations. This article seeks to inform fellow condominium directors with suggestions about how to manage your tree stock for the viability of the trees and the financial health of your corporation.

Boards of directors and property managers alike are pre-occupied with many compet ing priorities. Tree health may be the fur thest from one’s attention. For this author, the ice storm in December 2013 brought the subject of tree health to the fore: a limb from an ash tree infected with the Emerald Ash borer broke off and, luckily, fell away from his townhouse unit. Had it fallen in the other direction the result would have been catastrophic. The experience served as a wake-up call to pay greater attention to the conditions of trees in the community. Since then, tree care has become a focus for this author’s condominium corporation.

Evaluating Tree Stock for Reserve Fund Planning

The best place to start is to assess the cur rent condition of your tree stock. This can be achieved through a tree inventory. A tree inventory (or tree survey) provides information about the location, number, type, and condition of trees on your prop erty. The survey is usually conducted by a certified arborist. Trees and shrubs are tagged to identify their locations. The spe cies and sizes are recorded. The condition of each tree is assessed to identify potential stresses placed on your trees. The assess ment of its condition can be used to inform subsequent actions. Your arborist may rec ommend one or more actions:

• pruning branches to provide clearance from buildings,

• pruning to remove dead wood,

• crown thin pruning to remove stress on limbs or to allow sun or wind to pass through; or

• removing declining or dead trees

Regular pruning done on an annual basis

will spread costs into more manageable ex penses. Deferring or ignoring regular tree maintenance often results in a more costly and complex pruning activity resulting from a larger backlog of work.

The tree inventory can also be used to guide decisions for reserve fund planning. The cost to replace a tree is comprised of several elements. First tree removal costs vary by the size, location, and difficulty. Budgeting $500 to $1,000 per tree may serve as a rule of thumb. There may be ad ditional costs to grind the stump. Stump grinding is the process of cutting the stump into a mulch to remove the tree from protruding from the ground. In addition to removal costs, your municipality may have regulations governing the removal of trees. This includes fees and reporting requirements prior to obtaining approval to remove certain trees. Finally, there is the cost to plant a replacement tree. Costs vary by size and species selection, which will be discussed later. The tree inventory is a useful resource that your engineer may

use to prepare your corporation’s next re serve fund study.

Succession Planning and Tree Replacement Strategies

For many corporations your tree stock is the same age: trees planted as part of landscaping following completion of con struction of your high rise or townhouse complex. Often times, developers plant a monoculture of tree species. This may have been designed intentionally to cre ate a uniformity of the streetscape. Other times it may simply have been more cost effective to do so. In either case the lack of variety has more than one effect: the trees’ lifecycles will be similar; and they may be equally susceptible to disease. Therefore, it is incumbent upon Boards of Directors to devise a tree management plan that allows corporations to plan for gradual succession planning of your tree stock.

First and foremost, the best strategy is to sustain and extend the life of the trees you already have. Maximize your existing investments with proactive maintenance, such as: pruning, as well as mulching or aerating the soil, and watering trees regu larly. These modest actions can extend the life of your existing trees. The benefit is that it allows for gradual, planned renewal rather than widespread replacement. The latter is expensive and will place signifi cant demands on your reserve fund.

Next, the condition assessment from the tree inventory can prioritize trees in the worst condition. These can be ranked first for removal. Trees can be removed at any time. In the City of Toronto, for cases where regulations require a tree be replaced for one that is removed, they re quire that a tree be replaced in the same or

immediately following year. Replacement trees are best planted in the fall or early spring so as to reduce the stresses placed by summer weather conditions. There are advantages for filing paperwork with municipal governments if applications to remove multiple trees are done at the same time. Your arborist usually can process this on your corporation’s behalf – since tree removal applications often require a report submitted from a certified arborist. Arborists can also identify where the per mit process is not required.

Consider the types of trees your commu nity would like to plant as replacements. There are a variety of factors to consider – both practical and aesthetic:

• Choosing to increase diversity of tree species for both aesthetic and practical reasons;

• Choosing the right size and canopy for the planting location;

• Selecting drought- and disease-tolerant species;

• Selecting trees supportive of wildlife (birds and pollinators)

• Leaf colour, flowers, and bark texture for trees planted in prominent locations in your community;

• Whether you want trees that bear fruit (they can attract pests);

• Providing sufficient clearance away from buildings to reduce the impact of tree roots on foundations and pipes;

• Avoiding planting under hydro wires or near fences or underground utilities

Municipalities like the City of Toronto of fer recommendations for street trees . York Region and the City of Mississauga have similar resources to support residents’ tree planting interests.

Lastly if you have open space in your com munity consider whether to add more trees to increase the tree canopy. Where your community has space adjacent to municipal streets, you can request free tree plantings from municipalities. LEAF (Local En hancements & Appreciation of Forests) is an example of a non-profit organization which offers subsidized prices for multi-unit prop erty owners like condominium corporations.

Calls to Action for Sustaining the Urban Forest

Increasing awareness about trees and their benefits can engage residents to become more involved in tree care. There are a variety of resources to learn more about trees and the urban forest, including the aforementioned LEAF. One way to edu cate residents is to devote a section to an upcoming condominium newsletter about your corporation’s initiatives about tree care and the benefits to your owners. Residents can take an active role in main taining trees by watering them regularly.

For reference an earlier Condovoice Mag azine article (Volume 25, Issue 3, Spring 2020) offered suggestions for tree water ing. Individual townhouse homeowners can water trees planted on their exclusiveuse common elements. Invite high schoolaged residents to water trees on common elements. Recognize their contributions towards their 40 hours of required volun teer community service.

We are living through a rapidly changing climate. Caring for trees on our properties are specific actions to mitigate some of the worst effects of climate change. Beyond the environment benefits, proactive tree care may also benefit the financial health of your corporation. C V

Salim Dharssi

CEO & Founder managemate

Managing Change

Making the Most of Board Member Transitions

Minimizing

Downtime Onboarding

Newly Elected Board Members

Do you remember your first experience as a condominium Board Director? Mine is still fresh in mind. I was added into email chains mid thread and before my first Board meeting, I received a package of seemingly random documents with an agenda and previous draft minutes. It took me several meetings to get up to speed on the building’s operations and ongoing maintenance work. It took several more to fully appreciate the larger projects that were in the works or on the horizon.

Several months passed before I was able to meaningfully contribute. I thought to my self, could this time have been better used?

Boards have a tremendous obligation –they are responsible for managing the affairs of their condominium corpora tion (Condominium Act, s. 27(1)). When Boards are not at full strength, they fail to make the most of their resources. When they are understaffed, Boards have fewer people to plan projects, deal with resident incidents, work on committees, and over see their property manager and other staff.

Being shorthanded makes it harder for boards to meet objectives, including com pleting maintenance and improvement work on time and on budget.

Board composition turns over frequently. One or more seat on a condominium Board will turnover each year. It’s not uncommon for entire boards to turn over completely every three years. Some Boards will have Directors volunteering and being elected to serve multiple terms. This continuity helps, but it doesn’t eliminate the fact that other new Board members will come and go regularly over time.

If condo Boards can get newly elected or appointed Board members up to speed more quickly, they will benefit from being able to get more work done and at a higher quality level.

Here are three techniques that Boards and

property managers can use to get newly elected or appointed up to speed quickly:

1. Document Your Project Plans

Large projects consume a good chunk of each Board member’s time. Board members spend time planning projects including determining the objective of a project, its scope, the planned timeline for beginning and completing a project, key milestones that need to be completed and a budget for each stage. Some projects may be high pri ority, while others will be medium or low. Some projects will be in the planning stage for several weeks or months, while others will be in-progress, completed or inactive for future reconsideration.

Without a documented project plan, a new ly elected Board member has no choice but to piece together the plan for and status of ongoing projects from multiple incom plete sources. These are mid-stream email

threads, past meeting minutes and file at tachments. Even with full access to these records, is it possible to piece together the entire plan?

Now consider that newly elected Board member’s experience if they were able to review documented project plans. They would easily be able to see what stage each project was in, what was recently complet ed and what is on the horizon. The new Board member would find it easy to get up to speed by reviewing the details and status of each project.

Another benefit of documenting project plans is that a Board is then able to link documents that relate to each project, to its corresponding plan. These documents could be engineering reports, quotes, and invoices. When done correctly, the project plan not only turns into a one-stop shop for getting newly elected Board members up to speed on large projects, but is also a handy reference for all Board members and their property manager.

2. Provide Mentorship to New Board Members

Board member terms are staggered to make sure that in every Board there will be at least one or two directors who remain on the Board from the previous year. More over, some Boards will have directors with many years of previous Board experience – whether from the for-profit or other notfor-profit organizations. Other Boards may have directors who have served for multiple terms (i.e., 6+ years).

These more experienced board members are invaluable resources because not only will they have a wealth of knowledge about

their building’s operations and history, but they have a lot of Board governance experi ence. This experience equips these board members to run their Boards efficiently and effectively.

To get newly elected or appointed Board members up to speed more quickly, the ex isting Board members with more experience can mentor the newly elected or appointed Board members. The mentorship doesn’t have to be too time consuming and only needs to continue for the first 3-6 months of the new board member’s term. Mentorship can be as simple as scheduling weekly or biweekly chats over coffee or Zoom.

Mentorship will give the newly elected Board member a chance to ask questions and learn from the more experienced Board member, so that they can contribute more quickly than if they didn’t have time with their mentors.

3. Establish Committees for Smoother Transitions

Boards can’t manage their condominiums alone. They are part-time volunteers who have lives outside of their board duties. De pending on their condominium’s size and its amenities, boards will hire a variety of on-site staff including cleaners, superin tendents, front desk concierges, security guards, and property managers.

Condominium Boards may also form com mittees that are comprised of other owners and residents. Committees give Boards ex tra sets of hands for projects or other work that requires substantial planning or atten tion to detail. Common committees include finance committees, design committees, and special project committees.

Usually at least one director from the Board will join each Committee, usually as the Chair. This keeps a line of commu nication open between the Committees and the Board to ensure the Committee work is consistent with the Board’s needs and that work results flow back to the board.

Committees are an excellent source of knowledge for newly elected Board mem bers. Newly elected or appointed Board members can meet with Committee mem bers to get caught up on the Committees’ activities. Non-Board Committee mem bers have less overall responsibility for their condominium as compared to Com mittee members who are on their Board. So, the non-Board Committee members likely have more time to spend with new Board members. After being elected to the Board, new Board members can also join each of their condo Committees’ next regu lar meeting to learn about their mandate and work activity.

By forming committees, condominium Boards can get new directors up to speed more quickly by giving them more sources of information.

Condominium Boards that document their project plans, provide mentorship and form committees will minimize downtime when they are onboarding newly elected Board members. Boards that get their new mem bers up to speed more quickly will see higher overall productivity. This directly benefits owners and residents living in their community because improved pro ductivity improves the chance that main tenance and improvement work will get done on time and on budget. C V

George Armstrong General Manager Monster Plowing Company

Baby It’s Cold Outside

Choosing the Right Winter Maintenance Company

The Stakes are High so You Need to Become an Informed Consumer

Winter in Toronto is an inevitable nui sance for everyone, but for the manage ment and Board members of condominium associations, it’s a season of constant stress and pressure. Keeping a property cleared of snow and ice and enabling safe, 24/7 ac cess is a full time job, and the consequences of failing in these duties are catastrophic. Leaving your premises unprotected, or in the hands of a shoddy contractor can lead to accidents, personal injuries, and poten tial lawsuits.

The snow and ice management industry comprises many different companies of varying degrees of capabilities and trust worthiness, and choosing your contractor correctly is vital to establish an adequate level of service for your property. The de mands of every type of condominium as sociation and its lands and premises are based on the unique needs of the property, so it is of utmost importance to do your homework before signing your next snow removal contract. Your due diligence is required in order to ensure that you are entrusting the safety of your property to

a winter maintenance contractor that is well staffed, equipped, prepared, capable, reliable, and experienced. There are many important factors to consider before hir ing your next snow and ice maintenance contractor, and some of them might not be immediately obvious.

Define your requirements

Winter maintenance is a complicated op eration, so make sure the contractor you choose is fully prepared and able to provide the level of service your property requires. Your property needs to be reviewed in full detail, in order to create a comprehensive estimate of work and scope of service. No two properties are the same, and you need to go over the service of all parking areas,

driveways, walkways, landings, entrances, and steps as well as details regarding fine points such as snow piling, existing dam age and any potential obstacles. How busy is your property? What exactly do you have in mind, in terms of your expecta tions when it comes to arrival times? How quickly do you need your contractor to visit after the snow stops falling? Do you expect bare pavement conditions at all times? Do you require service during the snowfall, if it is ongoing? Do they have backup equip ment? Do they have access to a full team of staff? Do they even focus on snow and ice removal as a core facet of their business, or is this just a side gig? Is your contractor prepared to answer these questions, confi dently and with a high degree of account

ability in case something goes wrong?

A high degree of experience is necessary to monitor and forecast localized snowfall events, calculate strategic service routes and plans of attack, prepare the logistical response to varying types of weather, ar range the staff and equipment needed to provide the work, and manage the varied needs of multiple clients. Your contractor should be an expert in all things snow and ice. Ask them before signing any contracts, how exactly will their company meet the stringent demands of your property?

Do Your Due Diligence in Regards to Insurance

Slip and fall accidents can happen on any property, and the average cost of settle ments can be in the millions. Adequate liability coverage is an absolute necessity. Winter weather presents every property owner with the risk of slip and fall law suits, and due to the prohibitive costs of litigation and personal injury settlements, a winter maintenance company with any thing less than $5,000,000 of liability insurance is unacceptable. Many smaller contractors who are unable to acquire suf ficient policies operate with inadequate or non-existent coverage, and it is impera tive that as a prospective customer, you do your due diligence in making sure the company is properly covered for the work at hand. Make sure the company has the industry specific “snow removal” rider, and that every one of their employees is covered by the Workplace Safety & Insur ance Board (WSIB).

Today, fewer insurers write policies for contractors engaged in snow removal. Many contractors have been left without proper coverage or no coverage at all as a result. Contractors who face insurance issues are often still actively pursuing and signing new customers. It is only once a legal issue arises that it becomes apparent their coverage is inadequate or not pres ent. Simply checking a paper or PDF copy of a company’s insurance policy is not suf ficient due diligence from a client’s per spective. It is imperative that you contact your insurer to verify coverage, including permission for snow removal and winter maintenance work.

Another very significant consideration is worker safety. In order to avoid liability

for potential injuries, it is essential to pro vide adequate protection for people work ing on your property. To cut costs, some unscrupulous companies are completely uninsured and can even operate with il legal workers. There is a staggering risk for the customer in these situations. In the event that an ‘under the table’ worker is injured on your property, you may be liable for their injuries or damages. It is even possible for property owners and businesses to be liable for injuries sus tained by their own employees while per forming snow removal work. If you are considering hiring a company, you need to do your homework and find out exactly who they employ.

Have an Established, Properly Worded Contract

The weather may be unpredictable, but a company that gives you a proper winter maintenance contract will allow you to know what to expect no matter what. It is important to note that not all snow main tenance contracts are created equal. An exemplary winter maintenance contract should be legally binding and detail all as pects of the scope of work, service times, level of service, and quantitative measures of weather events, as well as details and diagrams tailored to each property’s needs. Make sure the contract specifies at what hour after snowfalls or after how many centimeters of snow accumulation service will begin, and what is done in the case of blizzards, ice storms, and freezing rain. Avoid companies that offer a contract that looks like not much more than an invoice. In the event of a dispute with your con tractor or in the event of personal injury or damage to your property, a winter main tenance contract that is little more than an invoice or bill of sale will not protect you.

Contracts that appear open-ended and ill-defined may leave your property unat tended should the contractor neglect their duties. Some companies offer open-ended contracts and pay-per-visit rates that may initially appear like a better deal compared to other companies that offer all inclusive fixed-rate packages that guarantee unlim ited service in any and all weather out comes. However, an open-ended, poorly worded contract may ultimately leave the client vulnerable to any possible charges at the contractor’s discretion, such as hidden

equipment costs or charges for additional services. It also provides little recourse should the contractor fail to show up at all, leaving you with the liability of clearing the snow and ice yourself. It’s important to remember that even though your con tractor may leave you with a good personal impression, they will ultimately only be as good as their service contract.

Compare Parameters of Service

When reviewing contracts, compare how different companies define what consti tutes a serviceable snowfall. Some compa nies will only attend to snowfalls, but not to ice accumulation events, while others provide a full, comprehensive level of ser vice for all types of risky weather. Some will provide service to all snow events that measure one centimeter of snow accumu lation or greater, while others will inten tionally have written into the fine print of their contracts that they will not plow snowfalls with any less than two, or even three, inches of accumulation. Historically, the Greater Toronto Area receives a num ber of light snowfalls each season between one and five centimeters of accumulation. These light snowfalls still present a great hazard to the people who use your prop erty, which is why all snowfalls of one cen timeter or more should always be serviced and salted. It is always important to make sure your snow and ice removal contract does in fact include these considerations.

Ask About Their Employees

No one wants their property tended to by untrained and unhappy staff members. A company that has an adequately-trained, dedicated, well-compensated, and legally hired snow removal team will deliver the best service, ten out of ten times. Having a team on retainer is essential to ensure that staff will always show up to the task whether there are several snowfalls in one week or none at all. Make sure there are more than enough employees to cover the amount of properties the company servic es. Having sufficient staff relative to prop erties served is crucial to excellent service. A proper ratio of one worker for every five properties is ideal. However, some compa nies operate with a ratio as high as one to sixty, leading to long wait times measured in days not hours or even no service at all. While a small contractor cannot operate a plow and simultaneously check the fore

cast or answer phone calls, and an umbrella company may have outsourced their plow work and customer service to an individual who does not know all the intricacies of snow and ice management, a professional winter management company retains a fully staffed workforce even in periods of calm weather, ready to go in the event they’re needed. Small contractors without these resources and umbrella companies without this specialization are often left unprepared for unexpected snow events –and in Toronto’s winters, these happen fre quently. Avoid companies that utilize sub contractors or hire day labourers through employment companies. These companies tend to be more focused on speed rather than quality, and sub-contracted employ ees are often less experienced in the nu ances of snow removal. They are also more likely to lack proper insurance and WSIB certification. Make sure that all employees are WSIB qualified so that you will not be held responsible should any injuries happen during the clearing of your property.

Understand Their Prices

We all hunt for bargains in our everyday purchasing, but snow and ice management is not something one should trust to the lowest bidder. The consequences of poor quality winter maintenance are too high, and unfortunately the industry is replete with scammers who will over-promise and under-deliver in order to make off with your money. Pricing of snow removal

contracts vary greatly depending on many factors, such as the size of the property, the intricacies of the work, or even the com petence and integrity of the surveyor. If the quote sounds too low - it probably is. Ask if the quoted price includes deicing as well as snow clearing, additional visits in periods of heavy accumulation, and all equipment costs. Understand how your winter maintenance estimate is calculated; you might be quoted per individual visit, priced according to the area of the prop

erty, or given a fixed-rate all-inclusive price that takes care of your property for the duration of the winter. While flat rate pricing can sometimes appear more ex pensive up front, case studies have shown that it is almost always the most cost ef fective route. Every necessity is already priced in regardless of the amount of snow storms that occur throughout the season. From the beginning to the end of the sea son, your property is covered. Should you need extra deicing done, multiple visits per snow event, clearing of windrows or blowing snow, or touch-ups, your rate will not change. With the unpredictable nature of Toronto’s weather, it is always better to know what you are paying upfront without fear of an ever-growing invoice. Look for value up front, not discounts. Seek guaran tees in terms of service quality, instead of cutting corners. If it looks too good to be true up front in terms of your pocket book, it will very likely end up costing you much more money down the line.

Check Out Their Equipment

A proper company should have a diversi fied collection of snow and ice management equipment that is well maintained, mod ern, and specialized for the task at hand. Many contractors will cut corners in or der to keep operating costs low. Plowing vehicles for commercial use are expensive, and manufacturers often have long waiting lists for them. Various snow plowing blades are available, from simple plastic blades

No one wants their property tended to by untrained and unhappy staff members. A company that has an adequatelytrained, dedicated, well-compensated, and legally hired snow removal team will deliver the best service, ten out of ten times

to hydraulically operated stainless steel blades with adjustable wings and other features designed to remove the maximum amount of snow. In order to meet the needs of each property, a proper company’s fleet must include specialized equipment, such as deicer spreaders, haulage crews, dump trucks, snow melters, tractors, and util ity vehicles. The company should also use eco-friendly ice control products that are less corrosive and act faster than regular road salt. Weather conditions in the win ter can be extremely damaging to trucks and equipment, and breakdowns are inevi table. Without a backup fleet of vehicles, companies are at the mercy of independent repair shops that often suffer shortages and backorders. One of the most common statements from prospective clients we hear is: “My contractor’s truck broke and I went without service for two weeks while he fixed it!” A professional winter main tenance company must have at least one back-up unit for every five active units at all times. Winter weather is more difficult for small contractors because they don’t have the necessary resources at their disposal. Many of their clients are left waiting for repairs because their equipment quickly becomes overwhelmed. Today, auto parts can take days, if not weeks, to arrive. A contractor without adequate backup equip ment will leave your property vulnerable.

Treat Snow And Ice Management With The Respect It Deserves

Proper winter maintenance is no casual feat. Anyone who watches the Weather Network knows that it is never possible to predict the weather with 100% certainty. This is not the concern of the City’s public works, which requires snow to be cleared within 12-24 hours after every snowfall. Your winter maintenance company needs to have a dedicated weather monitor ing system to stay ahead of the snow and provide up-to-the-minute localized fore casting, and experienced analysts able to interpret the advanced data and identify impending ice attacks and surprise snow events. Timing is crucial in these logistics, and the company needs to have a stream lined staffing structure that enables teams to be dispatched at a moments’ notice throughout the winter. It must command expansive facilities strategically located to give access to the main transportation arteries of the city, and must be aided by

GPS tracking, live cameras and sophis ticated algorithmic software to calculate the most strategic routes. A company that commands these resources and this level of expertise can only be forged by experi ence, dedication and cutting edge software at their disposal. When interviewing your potential snow removal contractor, make sure that your are properly informed of the technical prowess, knowledge and experi ence required to properly take care of your snow and ice on an emergency basis.

Be Informed and Pro-Active

As you can see, there is a lot to consider when selecting the right contractor. With so much on the line it pays to be informed and do your due diligence. Once a rela tionship is established with a successful contractor, not only will you provide safe ty and peace of mind for your residents but you will also enjoy the satisfaction of making a difference for the people that count on you.

Use the guideline questions below to help interview your prospective snow and ice contractors:

1) “How many properties did your com pany clear last year?”

Tip: If the answer is 60 or less, they are a one-man show.

2) “How much, and what type of insurance do you have?”

Tip: $2 Million is not enough for snow removal; the answer should be $5 Mil lion.

3) “Are ALL your employees covered by WSIB?”

Tip: Request a current issue of their WSIB clearance certificate and check its validity.

4) “How many trucks are in your fleet, and of those, how many are backup vehi cles?” Tip: A ratio of one backup truck per every 5 service trucks is excellent.

5) “Do you sub-contract any of the work performed?”

Tip: Did you know that many contrac tors take on more work than they know they can handle, and will then sell off any extra jobs to the LOWEST bid der prior to the beginning of the snow

season? Beware of companies that have their headquarters located in a differ ent city, or whose websites use stock photos. Successful companies love to show off their work, and how hard is it to provide some quality pictures?

6) “Do you have a 24/7 dedicated custom er service team?”

Tip: The contractor’s answer will like ly be: “Yeah, you can call me any time you want; I am up all night anyway!” Remember, they will be operating the plow then asleep after the shift and will, in fact, not be able to speak with you. A dedicated and true customer team is a must.

7) “Do you provide detailed diagrams and descriptions of the areas of my prop erty you will be servicing?”

Tip: Avoid disputes during the service season with your contractor; have a copy in writing of all areas to be ser viced.

8) “Is your pricing all-inclusive and flat rate for the season?”

Tip: Don’t be fooled into signing a contract that ultimately will leave you open for extra charges, no matter how initially cheap they make it seem.

9) “What volume of snow does your com pany start plowing at?”

Tip: A proper snow service should clear snowfalls at an accumulation of at least one centimeter of snowfall, as well as freezing rain, otherwise your property will be left vulnerable to black ice, hazardous freezing, and a severe danger for slips and falls.

The Stakes Are High

Hopefully this article has shared some new insights into the winter maintenance industry that will allow you to be better informed when you’re shopping for im proved services this coming season. Like everything else, professional contractors that can properly get the job done are in high demand, and there is an overall shortage of quality services available on the market. Avoid disappointment, frus tration, and legal issues by securing the services of a reputable company as early as possible. If you leave it to the last moment, you’ll be left out in the cold.

Bradley Chaplick Partner Horlick Levitt Di Lella LLP

The Law and You

The Right to Privacy in Condominium Buildings

In this article, we will discuss the right to privacy in Ontario condominium cor porations with a particular focus on com mon area surveillance. This article also includes practical tips for condominium Boards of Directors and managers.

The common areas of condominium buildings are commonly referred to as a “semi-public” space. They are neither fully private, nor fully open to the public.

We begin with the case of hidden surveil lance cameras in R. v. Yu.

R. v. Yu

In 2013, there were a series of retaliatory high-profile fatal shootings between rival criminal gangs in Toronto. This led to a massive police investigation, which cul minated on May 28, 2014, with the arrest of 112 individuals for various offences in cluding murder, drug and weapons traf ficking, and human trafficking.

As part of their investigation, the police installed hidden cameras in the common areas of the condominium buildings that the suspects lived in. This was done with the consent of the Board of Direc tors or property manager, but without a judicial warrant. Some of the criminal defendants argued that these hidden sur veillance cameras violated their constitu tional rights. In 2019, the Ontario Court of Appeal released its decision, entitled R. v. Yu, in which the court considered the right to privacy in the common areas of a condominium building in the crimi nal law context.

The Court of Appeal described various condominium building common areas and considered whether there was a rea sonable expectation of privacy:

1. In areas that were accessible to the general public, such as the visitor’s section of a parking garage, the

court determined that there was no reasonable expectation of privacy.

2. In areas that were routinely accessed by all condominium residents, such as the elevator lobby, there was a low ex pectation of privacy.

3. The expectation of privacy increased as you approached an individual dwell ing. For example, there was a greater expectation of privacy in a common area corridor next to your condomini um unit, as compared to the more com monly used areas of the building.

The Court of Appeal then stated that the hidden cameras installed in the common area hallways were unconstitutional, but not surveillance in areas accessible to the general public.

The court went on to state that covert recording is highly invasive of individual

Condominium Corporations Should Have a Written Privacy Policy That is Appropriate and Customized to your Community’s Specific Needs

privacy and that the Board of Directors and condominium manager did not have the legal authority to consent to the in stallation of hidden cameras on the com mon elements by the police.

In the writer’s view, this case should serve as a warning to condominium Boards of Directors and managers not to install hid den cameras on the condominium prop erty. For example, hidden cameras ought not to be used to prove that a person is breaking the condominium’s rules.

R. v. Jarvis

Privacy is not an “all or nothing” concept. As we learned in R. v. Yu, the right to pri vacy exists on a continuum, especially in semi-public spaces such as common areas in a condominium building.

In R. v. Jarvis, a high school teacher was secretly and voyeuristically recording his female students with a video camera hidden in his pen. Mr. Jarvis was charged with voyeurism under the Criminal Code. His lawyers argued that no crime had been committed because the students who were being recorded had no expectation of privacy while at school.

The Supreme Court of Canada overturned the lower court’s acquittal and found Mr. Jarvis guilty of voyeurism. Many of the Jarvis factors are applicable in the con dominium context, but not all the factors will be relevant in every case.

In the writer’s view, the following criteria are most applicable to the condominium context as it relates to the installation of security cameras and other forms of com mon area surveillance:

1. Location: As in R. v. Yu, the closer to the dwelling unit, or some other pri vate space, the greater the expectation of privacy.

2. Awareness and consent to the record ing: Are there signs indicating that the premises are under surveillance before you enter the area being recorded? Is the camera in plain sight, or is it hid den?

3. Manner of recording: Continuous re cording is more invasive to privacy

than a snapshot. Is the recording in high definition? Can the camera zoom in to view small details? Does the re cording include sound?

4. Content of the recording: Is the person engaged in an activity that would nor mally be done in private, such as get ting dressed? Are intimate body parts shown in the recording?

5. Rules relating to the recording: Is there a written privacy policy stating, for example, who has access to the re cordings and under what circumstanc es can the recordings be examined? Is the policy followed?

6. Purpose of the recording: Is the re cording for a legitimate purpose such as protection of personal safety or pro tection of property?

On the issue of “what is a proper pur pose?”, a privacy case from the Office of the Information & Privacy Commissioner of British Columbia, known as Re: Shoal Point Strata Council, held that the use of video surveillance for enforcement of condominium rules could be problematic in certain circumstances. In that case, the condominium directors were monitoring the cameras in the recreational facilities and were issuing fines to unit owners if any violations were observed. This kind of proactive monitoring of surveillance cameras was deemed to be excessive and unwarranted.

Practical Tips for Condominium Managers and Boards of Directors

1. In the writer’s view, condominium buildings with surveillance cameras should install signage indicating that the property, or specific areas within the property, are under video surveil lance. It is preferrable that the signs be visible before the person enters the area under surveillance.

2. Condominium corporations should avoid the use of hidden cameras, except in very rare circumstances, and should avoid recording sound unless there is a legitimate need to do so.

3. Condominium corporations should have a written privacy policy. Ideally,

this policy should be prepared by a law yer with relevant expertise. The policy would address procedures relating to video surveillance, as well as the col lection and dissemination of owners’ and residents’ personal information. A copy of the privacy policy should then be made available to all unit owners and residents.

4. Boards of Directors should consider creating a Privacy Officer position on the Board of Directors who is tasked with ensuring that the corporation’s privacy policy is properly implement ed, and that owners’ personal informa tion is protected and kept up to date. The Privacy Officer would also be responsible for investigating potential privacy complaints and responding to privacy-related questions from owners and residents.

5. Residents should be permitted to view surveillance footage relating to themselves, so long as it does not interfere with the privacy rights of other residents. For example, if a resident trips and falls in the con dominium lobby and requests a copy of the security camera footage showing the fall, then this request should be granted. There may also be situations where a legal opinion is required before security camera foot age is released.

6. Quite apart from privacy concerns, compliance with section 97 the Con dominium Act, 1998 (the obligation to give notice to owners before changing the common elements) must be con sidered when adding security cameras if the cost of the project exceeds 1% of the condominium corporation’s an nual budget.

If your condominium corporation does not yet have a written privacy policy, then consider contacting your condo minium lawyer for a privacy policy that is appropriate and customized to your community’s specific needs. A detailed privacy policy will ensure that you have the necessary protocols for collecting, retaining, disseminating, and deleting surveillance footage of the property and other personal information.

C V

CCI-T Welcomes New Committee Members

in the magazine – and prob ably find a similar situation and how it was resolved. You can find a fellow manager, or lawyer, or accountant, or en gineer to consult.

Sometimes it’s fun, sometimes totally frustrating – but never boring.

I joined CCI-T to help con nect and engage with other condominium professionals. It is a great tool for continu ing education on many varied condominium topics.

Dene Cousins

I have managed condomin ium corporations, high rise and townhouse properties, for over 25 years. I started with the turnover of a problematic building when my husband, a CPM Emeritus, asked me to help with – just for a few weeks.

Together, we formed a com pany, hired accounting staff and recruited candidates to be property managers for about 25 corporations over the next few years.

Since then, I have worked for the big three management companies and am currently with FirstService Residential.

I think the main problem for managers is knowing who to turn to for advice, when a thorny situation arises. This is where CCI becomes so valu able. You can look for articles

Chris Poland

I started with Malvern Con dominium Property Manage ment in 2011 when I entered the Condominium Manage ment field after leaving the fire protection field.

I’ve obtained experience manag ing all types of Condos including high rises, town houses, com mon element, and commercial.

In early 2022 I became a prin cipal owner and Vice Presi dent of Malvern Condomini um Property Management.

I decided to volunteer to help provide my experience in the industry and I am currently a member of the CCI-T Mar

keting Committee. I feel it is important to try and reach as many directors, property managers, and other condo minium professionals to help CCI-T grow as an organiza tion and make it the leading area to find the education and support needed as a part of the condominium commu nity.

New Committee Member Profiles

For upcoming webinars please see the CCI Toronto Events Calendar: ccitoronto.org/education-events/calendar

CCI Was There

In May and June CCI Toronto Hosted Two Timely Webinars

Exploring the Evolution and Expansion of CAT and What it Means for the Future of Enforcement

On May 19th CCI-T held the webi nar entitled “Case Law Update: The Changing Landscape of Enforce ment”, where Christina Ajith (moder ator), John De Vellis (Shibley Righton LLP), Jason Rivait (Miller Thomson LLP) and Victor Yee (Elia Associates PC) discussed recent enforcement decisions through the courts and the CAT. They explored the evolution and expansion of the CAT and what it means for the future of enforcement.

On June 16th, CCI Toronto hosted “Surfside Collapse, 1-year later, it could happen here!”. The panel in cluded Brian Horlick (Horlick Lev itt Di Lella LLP), Dean McCabe (Meritus Group Management Inc.), Lyndsey McNally (CWB Maxium Financial), Sally Thompson (Synergy Partners) and Stephen Skolny (BFL Canada). A year after the tragic col lapse of a high-rise condominium in Surfside Florida, our panelists not only shared what happened, how it happened and how it could happen here, they also provided key learnings and takeaways that we can implement to reduce the risks of a collapse in our condo communities.

CCI-T Welcomes New Members

Condominium Corporation Members: MTCC # 1263

Aquabella Bayside Toronto Inc.

Business Partner Members: Restorex Contracting Ltd.

Care Lending Group Lindsay Martin

Sentinel Security Inc. Brian Catarino

Individual Members: N. Jenkins E. A. Lynn D. Cousins S. Gordon S. Ilkiw P. De Marco-Cerullo

Professional Members: INA Construction Services Inc. Ilia Vangjeli

Shibley Righton LLP Ava Naraghi

Owens Wright LLP Al Daneshvar

Kipling Residential Management Inc. Gowri Shakthi

N C E R N S Z E E O G D A C A C O I E

U R E K A E P S P U M Y H L V E A C R C I K S

N T C

B X E A X B P G G E N W I Z O N M L S

D B A L D T W N E T J N R G C N P T T O U I S

E T A A N U Z O R N Q I O A G U A A S I I R C T

U G I K N D I S E Q F K G E M Y R R E D T O N R L O C N I V T I M H E R E X M I E I T U U A U U A D O L M I C T M D I L M E O I S A S I G A M Q O T S F O A E R O D R A E A C M P Z R I C N H R R C E D U S L D C E B I N T G I E A P L N I O G O S C G N E E M Y V P H T R P E E C F R Y G P I S F I O Y O A S I N K E D T C E C S U N E K S A T C N B M Q I D H I M O M R K A H C T M V A L S N N O I U M U S N U H G E I E T E G U T I V D N U T E N S S I E S E P I E N D T S I R X T O U T I I S V S I I T S E G W T I R A Q O E S U O S R V S D F N E M N T T S A I O A V V T M M C E Z N O S S F B O N A E E I B N S O P U G Z E E Y L R T K O U R F C S A S E O G H B V O P B H X T C S E S U G E A W Z U L S S N S T R O P E R E R K E Y N O T E S V Q P S R O G E

condominium owners

Insolvent Developers

Timely ideas, insight, inspiration and information of particular interest to condominium owners

Timely insight, and particular interest owners

Trust in Me

The Pitfalls of Paying Purchase Funds Directly to Developers

Building a condominium development is a massive financial undertaking. Any sud den fluctuations in the developer’s liquid ity may adversely impact any number of parties with a stake in the development project. In an attempt to improve liquidity and fund the ongoing construction, some developers resort to asking purchasers to pay some or all of the purchase funds to the developer directly. Ordinarily, such funds would be paid by the purchaser into a trust account set up for the benefit of secured creditors, such as first mortgagees.

When developers divert sale funds to pay for their construction costs, they inevitably deplete the pool of sale proceeds available for when they later need to pay back the secured loans of mortgagees. Such deficits can impair a developer’s ability to close the sale of the condominium units and convey clear title to the purchasers of those units.

Two recent Ontario decisions shed light on the priority disputes that arise when an insolvent developer is unable to satisfy its obligations to secured creditors and the serious consequences befalling those pur chasers who elect to pay purchase funds directly to the developer.

1. Equity will favour bona fide purchasers

The protections afforded to condominium purchasers will vary depending on how far the purchase has progressed at the

time when a priority dispute arises. Those who have paid for their unit in full are more likely to garner the court’s sympathies.

In Centurion Mortgage Capital Corp. v. Brightstar Newcastle Corp., 2022 ONSC 1059, the Court was dealing with a prior ity dispute between a purchaser who had paid the entire purchase price for a condo minium unit and the remaining mortgagee of the condominium development. The de veloper, Brightstar, had pressured the pur chaser, Mr. Rasmussen, to prepay the final balance of his purchase price ($270,320) to Brightstar. Brightstar had told Mr. Ras mussen that it needed money to complete construction of the project, and the balance of his purchase price could not be used for

Ava Naraghi Associate Shibley Righton LLP

construction purposes unless it was paid to Brightstar directly, rather than into the trust account of the deposit trustee. While initially reluctant, Mr. Rasmussen ulti mately acquiesced.

Guarantee Company of North America (GCNA), the remaining secured creditor with an interest in the condominium proj ect, claimed that its security had priority over any interests Mr. Rasmussen may have and he should not receive clear title to the unit. GCNA argued that Mr. Ras mussen had a valid claim for repayment of, what GCNA characterized as, his loan to Brightstar and he should (a) advance a further $270,320 into the deposit trust ac count in order to receive clear title and (b)

SCHNEIDER

Matilda

sue Brightstar to recover his money back on the loan.

The Court dismissed that argument, find ing that the risk should fall squarely at GC NA’s feet. GCNA’s interest was purely fi nancial, whereas Mr. Rasmussen’s interest was both proprietary in nature (in that this was his home) and financial. GCNA was in the business of offering bonds and taking on, and managing, the risks of doing so. It had unlimited joint and several indemnity claims available against Brightstar, its af filiates and its principals. Additionally, there was no evidence that any of these en tities and individuals were unable to make good on any liabilities they may have under their indemnities and guarantees.

The recourse available to Mr. Rasmussen paled in comparison. Mr. Rasmussen was simply the purchaser of a residential condo minium unit who had made the final pay ment on his unit in good faith. He did not have the means to make the final payment for his unit twice. The Court found that equitable considerations were “entirely” in

his favour and a vesting order giving him clear title to the unit was appropriate.

By contrast, in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., 2020 ONSC 5071, the Court considered wheth er the purchaser of a condominium unit, who had already paid a sizeable deposit but had yet to pay the full purchase price, had an equitable or proprietary interest that should take priority over the secured inter est of the first mortgagee on the property. The purchaser, Mr. Tan, paid $400,000 di rectly to the builder, Elite Homes, based on the builder’s assurance that paying a larger deposit to the builder directly would speed up the closing on the property. A receiver was subsequently appointed over the con dominium project, and they sought to dis claim the Agreement of Purchase and Sale between Mr. Tan and Elite Homes.

Mr. Tan argued that if the APS was dis claimed, he would not recover his deposit and would suffer financial hardship. In contrast to Mr. Rasmussen, this Court was not as sympathetic to his plight. The Court

accepted “that Mr. Tan is a victim of the improper use of the $400,000 deposit he paid directly to Elite Homes in the belief that this payment would expedite the con struction of the Mateo Property”. Never theless, the Court concluded that Mr. Tan “ran a risk when he paid $400,000 directly to Elite Homes” and would have to look to Tarion Corporation or other parties for recovery of his deposit.

The Court noted that if Mr. Tan had pre viously paid the full purchase price and attempted to complete the sale before the developer became insolvent, he could have sought an order of specific performance and may have been successful in enforcing a transfer of title. As a non bona fide pur chaser, however, he was simply out of luck.

2. Courts Will Give Effect to Clear Contractual Rights and Obligations

In addition to the proportion of the pur chase price paid by each purchaser at the time of the priority dispute, the other key factor that impacted the different outcomes in these two cases is the contractual lan

guage within their respective Agreements of Purchase and Sale.

In Centurion Mortgage Capital Corp., Mr. Rasmussen did not breach any of his obli gations under the APS when he advanced his final payment to Brightstar. The APS explicitly stated that the balance of the pur chase price was required to be paid to the vendor (i.e. Brightstar) or “as the vendor might direct”. Therefore, Mr. Rasmussen was entitled to rely and act on Brightstar’s direction that the balance be paid directly to it. In paying for his unit in full, Mr. Ras mussen fulfilled his financial obligations under the APS and reasonably expected that he would be able to close the transac tion and obtain clear title.

ner of his final payment would put Bright star offside its obligations or be detrimen tal to any third parties, including GCNA. There was no evidence that he assisted or conspired with Brightstar to breach its ob ligations to GCNA or anyone else.

On the other hand, in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., Schedule A to the APS explicitly stated that the APS was subordinate to any mort gage arranged by the vendor (i.e. the de veloper), and Mr. Tan would not have an interest in the unit until a Transfer/Deed of Land was registered in his favour. The Court distinguished this case from Ar madale Properties Ltd. v. 700 King Street (1997) Ltd., 2001 Can LII 28461, in which the APS made no reference to a contractual provision negating the purchaser’s interest in land or subordinating it to the mortgag ee’s interest (in addition to the fact that the purchaser was bona fide and the sale had effectively concluded prior to the receiver ship and bankruptcy).

interest by virtue of the contractual provi sions in the APS. A subordination of the mortgagee’s interest would run contrary to the terms of the APS. The Court of Appeal in C & K Mortgage Services Inc. v. Camilla Court Homes Inc., 2020 ONCA 817, af firmed the lower court’s decision, holding that Mr. Tan purchased a unit “that was subject to a prior mortgage” and the unit could not be conveyed to him unless the mortgage was redeemed.

Conclusion

Notwithstanding that Mr. Rasmussen may have had specific knowledge of GCNA’s mortgage when he advanced the final payment to Brightstar, the fact remained that he had no contractual obligations to GCNA. He was not a party to any contract with GCNA, nor privy to the dispute be tween GCNA and Brightstar. The Court found that he had no notice that the man C V

The Court found that the mortgagee’s interest had legal priority over Mr. Tan’s

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Those who purchase condominium units in insolvent or financially languishing developments are often the most vulner able stakeholders: their financial stake in a single unit is comparatively small to that of banks, financiers, and other insti tutional security holders, yet they, as pro spective homeowners, stand to lose the most when disputes about priority arise. Before advancing any purchase funds di rectly to developers, purchasers should be conscious of the risks associated with this manner of payment and ensure that they fully understand both their contractual rights and obligations.

PAGE

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Director,

The Last Word

Coming Out Behind

These statistics are going to have a major impact on condo fees, especially when we apply them to long-term capital repair plans.

Let’s break it down simply. If you have a $600 condo fee, with 50% going towards Operating expenses and 50% going to wards the Reserve Fund. Your increase might look something like this:

We are just beginning to feel these pres sures. Because condominium corporations update their Reserve Fund Studies once ev ery three years, we need to be prepared to see the full impact towards the end of 2022 and into 2023 (when condominium corpo rations that completed studies in 2019 and 2020 update their current plans.

It’s been two and a half years since “fourteen days to flatten the curve.” What a wild cou ple of years it’s been. Who would have pre dicted two years of lockdowns and restric tions that taxed everyone’s pocketbooks and mental health? In early 2020 we all knew that COVID-19 would have financial im pacts on condominium corporations, but our thoughts were short-term. Will own ers be able to afford to pay their condo fees with businesses closed? Are receivables and unexpected sanitation expenses going to create short-term cash flow concerns? How will we manage condo fee increases with so many community members out of work?

What we didn’t expect was the drastic im pact of inflation and a struggling supply chain. These financial impacts will be felt by condominium corporations for a very long time. According to StatsCan, the Residen tial Building Construction Price Index in creased by 35% in the GTA over less than 2 years (from Q1 2020 to Q4 2021). The Con sumer Price Index in March 2022 was 6.7%.

This assumes that the condominium corpo ration was already adequately funded. But in the last two years, we’ve seen two reports indicating that we had an existing problem with the adequacy of our Reserve Funds in Ontario. The Auditor General of Ontario released a report in 2020 suggesting that many of our buildings built between 1980 and 2000 would require an increase to Reserve Fund contributions of 50%. The Canadian Institute of Actuaries released a similarly concerning report in 2022. So, let’s add another 50% to the Reserve Fund contributions from our table below:

In this issue you read about the need to in crease clarity, consistency, and transparen cy in the use of loans to fund capital repair shortfalls. The article is timely, as loans are becoming a more common, powerful, and crucial tool in keeping condo fees at afford able levels.

Deferring work isn’t an option. The only thing it accomplishes is increasing the cost of the repairs, thus increasing condo fees by even greater amounts.

Special assessments may create even more financial hardship on owners, driving those already feeling financially strained into an even more critical situation.

It is a very real possibility that many con dominium corporations will have to imple ment increases of between 40-50% to their condo fees to meet their ongoing capital repair obligations. This creates concern that with our new interest rate environ ment post-COVID (impacting/increasing mortgage payments), and the rising cost of simply living, that increases to monthly condo fees will be unaffordable for many.

In today’s economy, loans are worth con sidering as an option that helps manage cash flow and buy more time to catch up. But more than just a tool to manage cash flow, the process to pass a borrowing by-law requires owner engagement and education – education in particular is one of the most important tools that you can give your owners to minimize conflict in your community with respect to financial challenges.

While it looks like we’re finally returning to normal life post pandemic, we’re coming out a little behind. Let’s drive social and financial success in our communities by ensuring we are all appropriately educated about the financial options that exist.

Lyndsey McNally OLCM, LCCI

Condominium Finance CWB Maxium Financial